🍎Trading Fundamentals No 5 🍊

👉SUPPLY AND DEMAND

Supply and demand play a crucial role in trading.

👉Prices in financial markets are determined by the interaction of supply and demand. When demand for a security is higher than its supply, prices tend to rise, and when supply exceeds demand, prices typically fall.

👉 Traders and investors assess various factors (e.g., news, earnings reports, economic data) to estimate future supply and demand dynamics, which influence their buying and selling decisions.

👉Key price levels, often based on historical supply and demand, can act as support (price floor) or resistance (price ceiling). Traders use these levels for decision-making.

👉Market orders execute immediately at the current market price, while limit orders specify a desired price. This reflects traders' expectations about future supply and demand.

👉High liquidity indicates a robust market with many buyers and sellers, making it easier to enter and exit positions. Low liquidity can result in price volatility and slippage.

👉Economic events like interest rates, inflation, and geopolitical developments can impact supply and demand, affecting asset prices.