Stock Market Supply and Demand

A stock's price movement, up and down until the end of the trading day, is strictly a result of supply and demand. The SUPPLY is the number of shares offered for sale at anyone one moment. The DEMAND is the number of shares investors wish to buy at exactly that same time. The relationship between supply and demand plays an important role in our study of rolling stocks. In fact, the channel that defines the support and resistance levels in our rollers is nothing more than an expression of the supply-demand relationship.

Supply and demand are always equal as they are the two sides of the same set of transactions, and discussions of "imbalances" are a muddled and indirect way of referring to price. However, in an unmeasurable qualitative sense, demand for an item (such as goods or services) refers to the market pressure from people trying to buy it. They will "bid" money for the item, while in return sellers offer the item for money. When the bid matches the offer, a transaction can easily occur (even automatically, as in a typical stock market). In reality, most shops and markets do not resemble the stock market, and there are significant costs and barriers to "shopping around" (comparison shopping) and this is one of the basics of Stock Tips.

When demand exceeds supply, suppliers can raise the price, but when supply exceeds demand, suppliers will have to decrease the price in order to make sales. Consumers who can afford the higher prices may still buy, but others may forgo the purchase altogether, demand a better price, buy a similar item, or shop elsewhere. As the price rises, suppliers may also choose to increase production, or more suppliers may enter the business.

The basic principle of buying low and selling high is how we derive profit when buying and selling stocks or trading the futures, forex  markets.  Traders can offer a lower price and typically end up somewhere in the middle. Smart investors look for deals where they can buy what they are looking for at a lower price than others pay. We all typically try or desire to buy at "wholesale" prices.  Most of you are thinking that I am wasting your time because you know this already and that's true; everyone applies this smart buying and selling action in every part of your trading history.