Supply and Demand
It is an economic model for the movement of prices in the financial markets, and to determine the price of any trading tool, it is necessary to know the bid and ask price. The laws of supply and demand are based on determining the relationship between the seller and the buyer.
When the demand price exceeds the supply price, it is called the “demand zone” and this leads to an increase in prices, but if the asking price is less than the supply price, it is called the “supply zone” and this leads to a decrease in the price, so investors wait to determine their direction according to the current zone and enter into deals, whether Buying or selling after selecting the type of area “Bid or Ask.”
The asking price is generally determined by the number of securities to be sold at that price, which is the opposite of the bid price, and the ask price is always higher than the bid price. The trader is supposed to buy in the demand area and sell in the supply area.
Supply and demand theory is important for understanding many economic schools and supply and demand zones can be identified through the MT4 & MT5 trading platforms through advanced charting tools that allow traders to easily identify them on the chart.
In short, the greater the supply of a commodity, the lower its price, and the greater the demand for it, the higher its price.