#Educational || Thread on Supply and Demand 🧵
This is where understanding the market begins.
The law of demand
Higher price = Less willing buyers
Lower price = More willing buyers
The law of supply
Higher price = More willing sellers
Lower price = Less willing sellers
This is where understanding the market begins.
The law of demand
Higher price = Less willing buyers
Lower price = More willing buyers
The law of supply
Higher price = More willing sellers
Lower price = Less willing sellers
1) Demand vs Supply zones
Demand zone- more willing buyers than sellers - price increase. (They are demanding the asset)
Supply zone - more willing sellers than buyers - price decreases. (They are supplying the market with the asset.)
Demand zone- more willing buyers than sellers - price increase. (They are demanding the asset)
Supply zone - more willing sellers than buyers - price decreases. (They are supplying the market with the asset.)
2) The law of Supply and Demand
Price will always seek the market equilibrium. This is where supply and demand curves cross each other.
Equilibrium is when both buyers and sellers have no motivation to buy or sell. But why does the market change anyways?
Price will always seek the market equilibrium. This is where supply and demand curves cross each other.
Equilibrium is when both buyers and sellers have no motivation to buy or sell. But why does the market change anyways?
3) Supply and demand shifts
The constant changes in the market are a reflection of buyers and sellers changing their perception about the value of the market.
(Purposely ignored The Algorithm)
The constant changes in the market are a reflection of buyers and sellers changing their perception about the value of the market.
(Purposely ignored The Algorithm)
4) Difference between Price and Value
Price is the number that represents the current market equilibrium and value is the perception of the price by market participants.
Price is the number that represents the current market equilibrium and value is the perception of the price by market participants.
5) Undervalued
When willing buyers think the asset is undervalued the demand for the asset increases. Buying activity may occur, causing price to increase. Eventually there are not enough coins to buy at a certain price. Buyers are willing to buy higher and higher.
When willing buyers think the asset is undervalued the demand for the asset increases. Buying activity may occur, causing price to increase. Eventually there are not enough coins to buy at a certain price. Buyers are willing to buy higher and higher.
6) Overvalued
When willing sellers think the asset is overvalued the supply for the asset increases. Selling activity may occur. causing price to decrease. There are not enough buyers to buy at a certain price. Sellers are willing to sell lower.
When willing sellers think the asset is overvalued the supply for the asset increases. Selling activity may occur. causing price to decrease. There are not enough buyers to buy at a certain price. Sellers are willing to sell lower.
7) What to look for on a chart
We look for areas where institutional or other large investors get involved.
A strategy is marking:
-The last UP candle before a down move.
-The last DOWN candle before an up move.
Preferably the expansion after looks violent (displacement).
We look for areas where institutional or other large investors get involved.
A strategy is marking:
-The last UP candle before a down move.
-The last DOWN candle before an up move.
Preferably the expansion after looks violent (displacement).
8) Trading opportunities
These large orders can't be filled all at the same time. So price often retraces back to these zones on lower timeframes.
On higher timeframes we see price reacting to these zones at a much later date. When zones are 'exhausted' they're be breached.
These large orders can't be filled all at the same time. So price often retraces back to these zones on lower timeframes.
On higher timeframes we see price reacting to these zones at a much later date. When zones are 'exhausted' they're be breached.
9) Point of interest
These zones can be seen as points of interest where we can find trades in. Don't get the illusion price HAS to reject here. So always use an entry model to confirm your trade.
These zones can be seen as points of interest where we can find trades in. Don't get the illusion price HAS to reject here. So always use an entry model to confirm your trade.
10) Help others!
If you have made it this far, I would appreciate it if you could share/like this thread so that others may learn as well. Help a brother/sister out!
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