5) Market Mechanics
Supply and demand is the most fundamental law driving stock prices. If you understand this, you understand 80% of why stock prices move. It's incredibly simple, yet many forget it.
Supply is the number of shares available for sale, demand is how many shares people want to buy. When demand exceeds supply, prices rise. When supply exceeds demand, prices fall. It's that simple.
Imagine concert tickets for your favorite band. The venue holds only 5,000 but 50,000 people want to attend. What happens? Ticket prices skyrocket on resellers. Conversely, if the band is unpopular and a 10,000-seat venue only attracts 2,000 people, tickets get crazy discounts. Stocks work exactly the same — the more buyers and the fewer sellers, the higher the price.
When BBCA announced a 20% net profit increase, many investors wanted to buy but few wanted to sell — high demand, low supply, price rises. Conversely, when negative rumors hit ANTM, many panic-sold but few wanted to buy — high supply, low demand, price falls.
After understanding this concept, apply it in tools so decisions become more objective and measurable.
Open Profit / Loss CalculatorWhy are small free-float stocks more volatile?
Because the available supply in the market is limited. When many people suddenly want to buy, there aren't enough shares for everyone, so the price can rise very fast. Conversely, when many sell, there aren't enough buyers and the price drops quickly. It's like selling limited editions — the fewer items available, the wilder the price swings.
Does supply-demand also apply to crypto?
Exactly the same! In crypto the effect is even more extreme because the market runs 24/7, there are no auto-reject limits, and liquidity is often lower than blue chip stocks. Supply-demand is a universal law for all traded assets.
