Supply and demand in market terms
Explain how supply and demand turn into price movement on a chart.
Lesson path
Market Foundations + Forex Mechanics
How Prices Move
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Explain how supply and demand turn into price movement on a chart.
Price moves when urgency changes
Supply and demand sound like textbook words, but on a trading desk they mean something simple. Supply is the group willing to sell. Demand is the group willing to buy. Price moves when one side becomes more urgent. If buyers want in badly enough, they stop waiting for a cheaper price and start paying what sellers are asking. That pushes price up. If sellers want out badly enough, they stop waiting for a higher price and start accepting what buyers are bidding. That pushes price down.
This is why candles have bodies and wicks. A strong candle body shows that price accepted movement in one direction during that time window. A wick shows that price visited an area but did not stay there. Neither one guarantees the next move, but both give clues about pressure. The chart is not showing opinions. It is showing where trades were willing to happen.
Think about a small $500 account watching EUR/USD. Your order is not changing the global price. But your job is not to move the market. Your job is to read which side has control, choose a clean risk point, and avoid fighting obvious pressure. When demand is stronger, pullbacks tend to get bought. When supply is stronger, bounces tend to get sold. That is the base layer under every pattern you will learn later.
Knowledge check
Answer before moving on.
1. What usually makes price rise on a chart?
2. What does a wick often suggest?
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