I've just noticed that most people who trade stocks or securities often talk about "buying pressure" and "selling pressure," but they don't really understand where it comes from. In fact, it's all about supply and demand, which is a fundamental rule that drives the prices of everything in the market.

Let's look at a real example before we get into the theory. In March, the Hormuz Strait was closed due to wartime circumstances, causing about 20% of the world's crude oil to disappear from the market instantly. The demand for energy remained the same, but the available supply dropped sharply. As a result, prices surged rapidly. This is an imbalance between supply and demand, in the form of a reduced supply.

Demand is the desire to buy goods at various prices. When prices fall, people want to buy more. When prices rise, people want to buy less. It's a fairly straightforward inverse relationship. Supply is the willingness of sellers to sell goods. When prices are high, sellers want to offer more. When prices are low, sellers reduce the amount they offer. This relationship moves in the same direction.

Supply equals demand at some point in the market. That point is called "equilibrium." Prices tend to be relatively stable and have little pressure to change. If the price is above the equilibrium point, sellers will offer more, but buyers will buy less, leading to excess goods. Prices then need to fall back to equilibrium. If the price is below equilibrium, buyers want more, but sellers reduce their supply, leading to shortages. Prices then tend to rise.

The same applies in the stock market. When there's good news about a company, investors want to buy more (demand increases), while sellers reduce their supply (supply decreases), causing stock prices to rise. Conversely, bad news causes sellers to increase their supply, but buyers reduce their demand, leading to falling prices.

Professional traders use this principle to find trading opportunities. They look for points where prices move sharply up or down (indicating imbalance) and then pause within a range (showing supply equals demand, as they look for a new equilibrium). When new factors come in, prices break out of that range. That’s a good moment to enter a trade.

What to remember is that supply equals demand is not just a theory for textbooks. It happens every day in the market. Every time prices change, it results from an imbalance between buying and selling forces. If you can predict when demand or supply will shift, you can benefit greatly in investing—whether in stocks, energy, gold, or even digital assets.