I want to share an understanding about a topic that most people overlook, but it’s very important when trading the market—that is, supply and demand.

When talking about asset prices, whether stocks, oil, gold, or even digital coins, everything is driven by this force. The desire to buy versus the desire to sell—it's simple to understand, but a deep understanding can help you predict prices more accurately.

Let's start with the basics. Demand is the desire to buy a product at various prices. If the price goes up, people tend to want to buy less. But if the price drops, demand increases. This is the natural law of the market. Supply, on the other hand, is the desire to sell. Sellers are willing to sell more when prices are high, but if prices fall, the amount offered decreases.

The key point is that when both sides meet, the price reaches equilibrium. That’s the point where price and volume stabilize. If the price is above this point, sellers want to sell more, but buyers want to buy less, leading to excess supply. Conversely, if the price is below this point, buyers want to buy more while sellers want to sell less, causing a shortage. Both situations pressure the price to return to equilibrium.

Now, an example happening in the oil market: when the Strait of Hormuz is closed due to geopolitical tensions, about 20% of the world's oil supply suddenly disappears from the market. Energy demand remains the same. The result? Prices spike rapidly. This is a supply shock caused by a sudden decrease in available supply.

I’ve noticed that most investors tend to look only at the price, without digging deeper into what forces are driving it. If we understand that demand is increasing or supply is decreasing, we can predict the price direction before others do.

The same applies to the stock market. Good news leads to increased buying pressure, while sellers hold back, pushing prices up. Bad news causes buyers to retreat and sellers to increase, pushing prices down.

There’s a technique called the Demand Supply Zone used to time buy and sell points. For example, when prices drop sharply (excess supply) and then start to stabilize, it’s a sign that selling pressure is weakening. If buying interest returns strongly, prices can surge. Conversely, if prices rise sharply (excess demand) and then pause, it indicates buying momentum is waning. If selling pressure resumes, prices may fall again.

Studying this principle requires observing real examples based on daily asset price movements. It’s not difficult if you understand the basics, but it requires consistent practice. The market is full of complex, interconnected variables. If you can read the signals of demand and supply volume, you’ll have an advantage in making investment decisions.