Supply and demand is perhaps one of the most fundamental concepts of economics and it is the backbone of a market economy.
Demand refers to how much (quantity) of a product or service is desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price; the relationship between price and quantity demanded is known as the demand relationship. Supply represents how much the market can offer.
The quantity supplied refers to the amount of certain good producers are willing to supply when receiving a certain price. The correlation between price and how much of a good or service is supplied to the market is known as the supply relationship. Price, therefore, is a reflection of supply and demand.
The law of supply and demand is a theory that explains the interaction between the supply of a resource and the demand for that resource. The theory defines the effect that the availability of a particular product and the desire (or demand) for that product has on its price. Generally, low supply and high demand increase prices. In contrast, the greater the supply and the lower the demand, the price tends to fall.
Supply and demand affects us more than we think. Kapag dumami ang isda nagiging mura ang presyo. Kapag konti naman sobrang mahal ng presyo. Same goes sa iba pa.
Sa stocks may tinatawag na SDI or supply and demand imbalance. Have you heard about old traders that don’t use TA or FA?They also don’t use charts pero nakakapagtrade sila successfully. They understand the supply and demand at yung gamit nila is yung SDI. Sa market may buyers at may sellers.
SDI happens kapag di balanse ang buyers sa sellers. Kapag mas marami buyers (volume ng bids) kesa sa sellers mayroong positive SDI.
The chance na tataas ang stock is great. Kapag marami naman sellers (volume ng ask/sell order) kesa sa buyers/bids mayroong negative. Ang chance na bumagsak ang price ay malaki.
If you look at the example you can see na positive sdi si ZHI while negative SDI naman si ism…
To be continued to part 2.