Since I started investing in the stock market, I’ve realized that one thing drives the prices of all assets: trading between buyers and sellers—whether it’s stocks, energy, gold, or even digital assets.

But what I found most people still don’t understand is what demand really is, and how it causes prices to move. I also spent quite a while trying to understand this before the picture became clear.

Put simply, demand is the desire to buy goods at different price levels, while supply is the desire to sell. When you plot both on a graph, you’ll see a downward-sloping demand curve and an upward-sloping supply curve. The point where the two lines intersect is where equilibrium price occurs.

The law of demand is very straightforward: when prices rise, the desire to buy decreases; when prices fall, the desire to buy increases. Why is that? When prices drop, your wallet has more real money, so you can buy more. Also, the product seems cheaper than other similar goods, which makes people more willing to switch and buy this one.

As for supply, it is the desire to sell goods at different price levels. Sellers adjust their willingness to sell in the same direction as the price. When the price rises, they want to sell more. When the price falls, they reduce the quantity they sell, because their production costs haven’t decreased—or because they believe prices will bounce back.

I remember that when the Strait of Hormuz was closed during that tense situation, about 20 percent of the world’s crude oil that flows through that point disappeared from the market immediately. This is what’s called a supply shock. While the demand for energy (demand) stayed the same, the result was a rapid surge in prices because of shortages. This is the most serious real-world application of the supply-and-demand principle.

Now, when I look at financial markets, I see that it’s more complicated, because it’s not just about price. There are macro factors involved—such as interest rates. When interest rates are low, investors move to buy more stocks. Market sentiment also has a huge impact. When good news comes out, everyone wants to buy; when bad news breaks, everyone wants to sell.

For stock analysis, demand is the buying pressure coming in, and supply is the selling pressure going out. When buying pressure is stronger than selling pressure, prices rise. When selling pressure is stronger than buying pressure, prices fall. In technical analysis, I use various tools to look at these two sides—for example, candlestick charts. If the candlestick is green, it means buying is winning; if it’s red, selling is winning; if it’s a doji, both sides are equal.

Finding support and resistance is also important. Support is the level where buying pressure is waiting to enter. Resistance is the level where selling pressure is waiting to sell. When the price comes close to these levels, clashes often occur.

I like using the Demand Supply Zone technique to time trades. When I see the price rising rapidly, then consolidating, and then—when a new factor comes in—the price continues rising, that’s Rally Base Rally, or RBR, which is a continuous upward movement within an uptrend. I can enter long right when the price breaks above the upper boundary of the consolidation.

On the other hand, when I see the price plunging rapidly, then consolidating, and then—when negative factors come in—the price continues falling, that’s Drop Base Drop, or DBD, which is a continuous downward movement within a downtrend. I can enter short right when the price breaks below the lower boundary of the consolidation.

In reality, demand isn’t a difficult concept, but it requires practice—frequently looking at real price charts. When you start to see that price changes are tied to clashes between buying and selling forces, you’ll begin to view the market differently. You won’t just look at whether prices are going up or down—you’ll understand why they move and when you should buy or sell. That’s what allows me to time my entries and exits more effectively in the market.