## Why Investors Need to Understand Demand and Supply: The Key to Price Prediction

The common phenomenon we see every day in the stock market—stock prices fluctuating continuously—has deeper driving forces than news, interest rates, or politics. These are **Demand and Supply**—the perpetual forces of buying and selling battling in the market. This concept is not just basic economics but a powerful price prediction tool for those who can read signals correctly.

## What Are Demand and Supply: From Theory to Practice

First, we need to distinguish between the two main indicators:

( Demand: The buying force that drives prices up

Demand )Demand### or **Otopan** is the desire to purchase goods or financial instruments that varies with price levels. When prices are low, investors decide to buy; when prices are high, the number of buyers tends to decrease. This is called the **Law of Demand**, and it affects stock prices similarly to goods.

Factors that increase or decrease demand include:
- Liquidity in the financial system (When banks print more money, investors have more funds to buy stocks)
- Investor confidence (Good news or strong earnings)
- Interest rates (Lower interest rates = higher demand for stocks)
- Future company prospects and forecasts

( Supply: The selling force that pushes prices down

Supply )Supply### or **Otopan** is the quantity of stocks willing to be sold at various price levels. Conversely to demand, supply has a direct relationship with price—higher prices encourage more selling. This is called the **Law of Supply**.

Factors that increase or decrease supply include:
- Company policies (Capital increases or share buybacks)
- New listings of other companies (IPO)
- Regulatory requirements (e.g., Silent Period restrictions after IPO)
- Seller sentiment and forecasts

( Equilibrium: The point where supply and demand meet

When the demand and supply lines intersect, this point is called **Equilibrium**. It is the price level accepted by the market and where prices tend not to change.

When there is imbalance—prices above or below the equilibrium point—the market will use adjustment mechanisms to return to equilibrium:
- If prices are above equilibrium, many sellers will rush to sell to get higher prices, leading to stock surpluses, and prices are forced to fall back.
- If prices are below equilibrium, many investors will rush to buy opportunities, leading to shortages, and prices are forced to rise back.

## Demand and Supply and Stock Price Forecasting in the Real Market

The theory is elegant, but practical application requires investors to be able to read signals.

) 1. Reading signals from candlesticks ###Candlestick(

Green candlestick )Close > Open### indicates buying strength—demand is strong, and prices are likely to continue rising.

Red candlestick (Close < Open) indicates selling strength—supply is strong, and prices are likely to continue falling.

Doji candlestick (Open ≈ Close) indicates equal strength of both sides; the price may reverse or stay uncertain until new factors emerge.

( 2. Following the trend )Trend(

If prices create new highs, demand remains strong, and the trend is upward.

If prices create new lows, supply remains strong, and the trend is downward.

If prices fluctuate within a range, both sides have equal strength.

) 3. Finding support and resistance ###Support & Resistance(

**Support** is the level where investors see the price as cheap—demand is waiting here. When prices fall to this level, they tend to reverse upward.

**Resistance** is the level where investors see the price as expensive—supply is waiting here. When prices reach this level, they tend to reverse downward.

## Demand Supply Zone Strategy: Technical Trading Timing

Modern traders incorporate the understanding of demand and supply into the **Demand Supply Zone** technique to catch trading opportunities.

) Reversal Trading ###Reversal(

**DBR )Demand Zone Drop Base Rally###:** The price drops rapidly due to excess supply, then pauses within a range as selling pressure eases. When good news arrives, demand overtakes supply, breaking the upper boundary and rallying. Traders can buy at this breakout point.

**RBD (Supply Zone Rally Base Drop):** The price rises due to excess demand, then pauses within a range as buying pressure eases. When negative news comes, supply overtakes demand, breaking the lower boundary and plunging. Traders can sell at this breakout point.

( Trend Following Trading )Continuation(

**RBR )Rally Base Rally###:** Price rises, pauses, then continues upward—reflecting strong demand. Traders follow the uptrend.

**DBD (Drop Base Drop):** Price drops, pauses, then continues downward—reflecting strong supply. Traders follow the downtrend.

## Summary: Learning Demand and Supply to Increase Win Rate

**Demand and Supply** are not just economic terms but the core of price movements. Deep understanding of buying and selling forces, combined with reading candlesticks, trends, and support & resistance levels, will give investors a rational perspective, enabling more accurate predictions of price directions and entry/exit timing. The importance of studying this is not to win every time but to understand "why" prices move and "when" is the right time to act.