What are demand and supply? Traders need to know before swinging their funds

Honestly, demand and supply refer to the balance between buyers and sellers in the market—but at first glance, it might seem unrelated to stock investing. The truth is, these are fundamental drivers that propel the price movements of everything in the financial markets, whether stocks, crypto, or other assets.

First, understanding the basics

###Demand( is the buying force

Imagine that at a stock price of 100 baht, there are people wanting to buy 1,000 shares, but at 150 baht, those same people might reduce their demand to 500 shares because:

Income effect – When prices rise, your real wallet seems smaller. You become more cautious about spending.

Substitution effect – If Stock A is too expensive, why not try B, which is cheaper?

Other factors influencing demand include investors’ income, liquidity, confidence, and even news or market trends.

)Supply### is the selling force

Conversely, when the stock price reaches 150 baht, existing shareholders are more motivated to sell—why hold if they can get a good price? But if the price drops to 50 baht, some might reduce their selling because the value no longer seems worth it.

Factors controlling supply include capital increase policies, share buybacks, IPOs of new companies, market regulations, and future price expectations.

(Equilibrium) — the “just right” price of the market

When the demand and supply curves intersect, that’s the price at which the market is willing to buy and sell. If the price rises from this point, supply exceeds demand, causing prices to fall back. If it drops, demand exceeds supply, pushing prices up.

The market thus has a natural “counterforce.”

What does it mean in the financial markets?

Macroeconomic factors ###GDP, inflation, interest rates( directly influence demand. For example, if interest rates are low, investors look for returns in stocks, boosting demand.

Supply is affected by corporate decisions )IPOs, share buybacks, capital increases( and the liquidity in the system.

Using demand-supply to time trades effectively

)Look at candlesticks(Candles)

• Green ###Close higher than open( = demand wins, prices likely to continue rising
• Red )Close lower than open( = supply wins, prices likely to continue falling
• Doji )Open equals close( = demand-supply balance, watch for order signals

)Observe trends(Trend)

If prices make new highs sequentially = demand is strong, continue

If prices make new lows sequentially = supply is strong, continue

If prices break out of a range = the equilibrium shifts, trading opportunities arise

###Use Demand-Supply Zones(DBR, RBD, RBR, DBD)

DBR ###Drop-Base-Rally( – Price drops, forms a base, then surges → buy at breakout points

RBD )Rally-Base-Drop( – Price rises, forms a base, then drops → sell at breakout points

RBR & DBD – continuation in the same trend → follow the trend

Why do traders need to know this?

If you understand that demand-supply patterns are changing, you gain a “lens” to see the market direction—not just guessing or hoping for a big move. It’s about timing and confirmation.

Whether using fundamental analysis )company data( or technical )Price Action( analysis, the key is understanding that demand and supply refer to the origin of price movements—not just small parts of economic theory, but the fundamental forces behind market shifts.

In summary: Learn from real data systems. Don’t risk your own money on incomplete knowledge. Let experience do the work for you.