How demand and supply affect stock prices

financialexpress.com:

Demand and supply theory is the core concept of economics. In the simplest language, it means that when the demand for a product increases with the supply shortage, its price increases. In the contrary case, the supply of the product increases without an increase in the demand, and its price falls. The wonders of demand and supply can be seen in every candlestick chart of shares you open.

The candlestick chart helps in tracking the movement of the price of a stock. This action and reactions to the prices keep the market going. It can be said that with the knowledge of demand supply and price action, a trader learns to track the momentum of the market.

This theory is applicable in almost all markets. When it comes to the stock market, the demand and supply theory plays an important role in forecasting the stock price.

The core aim of the stock market is to let people buy and sell the stocks they find promising in terms of investing and trading. The buying and selling go hand in hand. If there is a buyer of a stock, there must be a seller, then only the order executes. The same goes for the situation of selling the stock.

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It is similar to buying a product from a shop. In this scenario, you are the buyer and the shopkeeper is the seller. But when the shopkeeper has too many buyers for a single product, he will eventually need to increase the price of the product. Now, the one who can afford to buy the product at a high price will buy it. The rest of the buyers will wait until the price goes down to normal.

The price of stocks also works in a similar way. You must have seen stocks of some famous companies trade at higher prices. The reason behind this