## Stock prices go up and down, really controlled by supply and demand charts

Every trader says that stock prices are driven by "buying pressure - selling pressure," but have you ever wondered where these forces come from and why they can control prices? The answer lies in the **Supply and Demand** contracts, which are the foundation of economics for a long time and are now playing a crucial role again in stock investing.

## Why "Smart" traders need to understand supply and demand charts

Whether you're a long-term investor or a short-term trader, analyzing supply and demand (Supply & Demand) is "an evergreen tool" because the only thing truly driving stock prices is the balance between those who want to buy (demand) and those who want to sell (supply).

Imagine: if 1 million investors want to buy stocks but only 100 sellers are available, what will happen to the price? It will definitely go up. Conversely, if there are many sellers but few buyers, the price will inevitably fall.

## What exactly are supply and demand?

Simply put:
- **Demand (Demand)** = the quantity of goods buyers want at different prices
- **Supply (Supply)** = the quantity of goods sellers want to offer at different prices

The law of demand states: high price → demand decreases (You won't want to buy stocks that are too expensive); low price → demand increases (Cheaper stocks make buyers want to buy more).

The law of supply is the opposite: high price → sellers want to sell more (because they get higher profits); low price → sellers want to sell less (because it causes losses or lower profits).

## Supply and demand graph: the meeting point is the holy grail

Picture two curves: one slopes downward (demand), the other slopes upward (supply). The point where they intersect is called **Equilibrium (Equilibrium)**. This is the "fair" price that naturally forms according to market dynamics.

At this point:
- No excess inventory (which would force sellers to lower prices)
- No shortages (which would push buyers to bid higher)

But stock markets are never static or like a science experiment. When good news, bad news, or macro factors come in, the equilibrium shifts, and prices start to fluctuate.

## Financial markets: small shifts in supply can change prices by 10-20%

When you see a stock "jump" or drop more than 10% in a single day, it’s not just coincidence. Usually, it’s because:

**Demand side:**
- Investors expect the company to grow well (e.g., increased profit margins) → want to buy more → price rises
- There’s news about an exciting new IPO → people lack cash, sell old shares to prepare → price drops
- Investor confidence is high (happiness) → more buying

**Supply side:**
- The company issues new shares (capital increase) → supply increases → price usually drops
- The company announces share buybacks → supply decreases → price rises
- New regulatory issues arise → costs increase, sellers reduce volume → price drops

## "Demand Supply Zone" technique: real money-making method

Professional traders often use the **Demand Supply Zone** technique to time their buy and sell points. The principle is:

**Uptrend (DBR - Drop Base Rally):**
1. Price plunges sharply (excess selling)
2. Price forms a base (buyers start stepping in)
3. Price reverses upward (buying pressure wins)

Traders buy at the point where the price begins to recover, expecting the uptrend to continue.

**Downtrend (RBD - Rally Base Drop):**
1. Price surges upward (excess buying)
2. Price forms a base (sellers start stepping in)
3. Price drops sharply (selling pressure wins)

Traders sell at the point where the price begins to weaken, expecting further decline.

## Price Action: how to tell if demand is winning or struggling?

Look at candlesticks (Candlestick):

- **Green** = close > open = strong demand
- **Red** = close < open = strong supply
- **Doji** (small candle size) = both sides are evenly matched = wait and see, no clear winner yet

Large green/red candles indicate that "one side has clearly won," suggesting the trend may continue.

## Support & Resistance: when "buying" and "selling" forces repeatedly decide

**Support (Support)** = price level where downward movement is repeatedly halted because buy orders are waiting (investors believe this is a good price).

**Resistance (Resistance)** = price level where upward movement is repeatedly halted because sell orders are waiting (investors want to sell, believing the price is too high).

Key point: the more times support/resistance levels are tested, the stronger they become, showing that big players agree that these levels are significant.

## But analyzing supply and demand alone isn't enough

Because in real stock markets, supply and demand are influenced by complex factors:

**Macroeconomics:**
- Low interest rates → investors move from banks to stocks → demand increases
- Government budgets increase → money flows out → confidence rises → more stock buying
- High inflation → real money decreases → investors sell stocks to hedge

**News and external factors:**
- Company reports better-than-expected profits → buy
- Fines or penalties from authorities → reduce profits → sell

**Supply-side factors:**
- Approaching IPO lock-up expiration (Silent Period) → major shareholders may release shares → supply increases
- Large insider buying → supply decreases

## Summary: supply and demand charts are not enemies but allies

While supply and demand are theoretical models, the actual movement of stock prices in the real world is much more complex. But if you understand **supply and demand charts**, you will see that:
- Price rises today = increased buying pressure
- Price falls tomorrow = selling pressure enters
- Price consolidates = changes in supply or demand

Studying Price Action and supply-demand systems isn't difficult, but it requires real practice with actual stock price movements to see the full picture. Once understood, your trading foundation becomes much stronger.