Understanding supply and demand easily to catch the right moment to make money in the market

If you’ve ever been confused by the term “demand and supply” and thought it was complicated, be satisfied. Because in reality, it simply indicates “how much people want to buy” and “how much people want to sell.” Once we understand this point, everything will become clearer, including predicting the price direction of various assets, whether stocks, digital coins, or market commodities.

Why are demand and supply important to investors?

The price of any asset is not created by magic, a wizard, or some trick. It results from a war between two parties: buyers and sellers. When more buyers flood in than sellers, the price will rise. Conversely, when sellers try to offload more than there are buyers, the price will fall. This is the core of demand and supply that investors rely on for decision-making.

Meet the two real players of the market

Demand side: When people want to buy

Think of a Nike shoe auction for a famous athlete. If only three people are interested, the price won’t be high. But if a hundred people are ready with their wallets, the price will spike rapidly. That’s demand. It reflects the desire to purchase goods at various prices.

But why do many people want to buy? Because of various factors such as:

Income levels: When people have more money (perhaps from bonuses or investment profits), they are willing to pay more to get the products they want.

Feelings: The psychological confidence that “reading forecasts that this coin will rise tenfold” makes people less hesitant and willing to pay high prices even if the cost is high.

Other factors: Such as seasonal effects, discounts on competing products, or good news from companies.

Supply side: When people want to sell

Opposite to buying, when prices go up, sellers tend to offer more goods because who wouldn’t want to sell at a high price? In a company, if the production cost is 50 but the selling price is 200, the manufacturing team will naturally increase production. Supply then increases accordingly.

However, the quantity of goods offered is influenced by:

Production costs: If raw materials become expensive or wages rise, producers will become “tired” of increasing supply.

Technology: When new machinery allows faster and cheaper production, supply will surge.

Number of competitors: If new traders enter the market selling the same product, supply will flood into the market.

Equilibrium point: where buying and selling meet

It’s not just about demand or supply alone because neither can determine the price by itself. The actual price occurs where buying and selling meet and balance each other. This is called “equilibrium” or the point where the price stays steady because both sides are satisfied with that price.

Imagine bargaining in an old market. If the seller is confident at 200 baht for fish, but the buyer offers 100 baht, there’s still a gap. They negotiate until they agree, say, “150 baht, is that okay?” Once they agree, that’s the equilibrium point where the price will stay.

Simple rules of demand and supply

Law of demand: “Price high → fewer buyers” “Price low → more buyers” — this is an undeniable fact, accepted even by economists.

Law of supply: “Price high → more sellers” “Price low → fewer sellers” because the reason is clear: “more profit.”

From these two laws, we see that demand and supply truly interact when they “can automatically bring the price back to equilibrium” whenever the price deviates from it.

For example, if an asset’s price moves above its true value, sellers become alert: “Wow, the price is high,” and decide to lower prices to sell quickly. Meanwhile, buyers see the high price and become discouraged: “Oh, I’ll wait for a lower price.” These groups continue negotiating until the price returns to normal.

Using demand and supply to analyze stocks

1. From a fundamental perspective

Economics is rooted in natural laws that investors understand. Investors don’t just care whether “Pantip stock is expensive or cheap,” but rather “how much profit the Pantip company will make this year.” When profit forecasts improve, everyone starts buying, increasing demand, and thus the price rises.

Conversely, if news indicates the company will face problems, shareholders will sell, and the stock price will decline.

2. From a technical perspective

Demand and supply are analyzed through observing “price” and “volume” in detailed trading.

Price Action: look at candlesticks

• Green candlestick (closes higher than it opens) = buyers win = strong demand
• Red candlestick (closes lower than it opens) = sellers win = strong supply
• Doji candlestick (opens and closes at the same level) = indecision between both sides = no clear direction

Trend Analysis: look at overall price direction

• Making new highs consistently = demand is leading
• Making new lows consistently = supply is dominating
• Moving within a range = both sides are balanced

Support & Resistance: identify battle points

• Support line (= where price stops falling) = buying strength
• Resistance line (= where price stops rising) = selling strength

Demand Supply Zone technique: the real way to catch the moment

When price moves, it doesn’t go up and down smoothly. Sometimes, there’s “imbalance,” meaning one side dominates heavily, causing rapid price movement—either a sharp rise or a sharp fall. Then, as the price “recovers,” the other side re-enters the fight, causing the price to oscillate within a narrow range to find a new balance.

The Demand Supply Zone technique is used to “capture” this change.

( Reversal Trading ):

DBR: Drop Base Rally ###drops then rises again(

• First: Price plunges )with high supply(
• Second: Price stops and begins to oscillate, gradually gaining buying interest
• Third: When buying wins, price breaks through resistance

RBD: Rally Base Drop )rises then falls again(

• First: Price surges )with high demand(
• Second: Price stops and begins to oscillate, attracting selling pressure
• Third: When selling wins, price breaks through support

) Continuation Trading (:

RBR: Rally Base Rally )rises again###

• Price rises → pauses → rises again
• Indicates buying strength still exists, just taking a break

DBD: Drop Base Drop (falls again)

• Price falls → pauses → falls again
• Indicates selling strength still exists, just taking a break

Factors controlling demand and supply in the financial markets

( Demand is affected by:

• Economic confidence: When the economy is good, people have money to buy assets
• Interest rates: Low interest rates → more liquidity → buy stocks
• Liquidity in the system: More money circulating → increased investment
• Good news: High profits from companies → people want to buy stocks

) Supply is affected by:

• Corporate policies: Stock buybacks → reduce supply / Capital increases → increase supply
• New companies entering the market: IPOs → increase in securities supply
• Regulations: Restrictions on selling stocks (Silent Period) → reduce supply
• Production costs: High wages → stop increasing production

Tips for applying demand and supply in real life

Every time you see stock prices move, ask yourself:

• “Are more people buying or selling?”
• “If more are buying, how many days will this buying pressure last?”
• “When will the buying pressure run out, and the price reverse?”

When you can think about these, you have a simple understanding of demand and supply. The rest is practice—observe real prices and wait for clear signals like “more buyers” or “more sellers.” This is how professional traders release positions and make significant profits from the market.

Summary

Demand and supply are the fundamental “repetitive” basis of price setting. It’s a dance between buyers and sellers, every minute, every second, in the market. Understanding it simply is enough to help you make better investment decisions. Continuous practice in observing real prices will deepen your understanding until you become someone who can “read prices” as easily as reading a book.