Supply and demand describe the tug of war that sets prices. When more people want to buy than sell at the current price, prices tend to rise. When sellers outnumber buyers, prices tend to fall. In share markets this plays out continuously through the order book as news, earnings and mood shift orders around.
Key takeaways
- Prices move when buy and sell interest are out of balance.
- More shares listed or sold can add supply; buybacks and tight float can reduce it.
- Demand can change quickly on news even if supply is fixed in the short run.
- Understanding both sides beats looking only at a headline price chart.