Who it's for — Anyone who reads a chart as an abstract line. Every candle records agreements between market participants (humans and algorithms): supply and demand drive every price move.
In trading, demand (bid side — buyers) and supply (ask side — sellers) describe participant intent and aggression. Price moves when one side accepts worse terms to execute now: paying higher or selling lower.
In simple terms — Every trade has a buyer and a seller. Markets rise not because there are "more buyers", but because buyers are more **aggressive** and sweep available ask prices.
Aggression imbalance
In simple terms — With similar volume, price stays flat. When one side accepts progressively higher (or lower) prices, the quote moves.
Every fill matches a buy to a sell. Directional movement needs an aggression imbalance: market or aggressive limit orders consuming liquidity on the opposite side of the order book.
| Situation | Price effect |
|---|---|
| Aggressive demand | Ask consumption → price up |
| Aggressive supply | Bid consumption → price down |
| Balance | Tight range between support and resistance |
Example — A stock sits at $50 for hours. A participant must buy size: orders consume all supply between $50 and $55. Last traded price jumps — from executed imbalance, not "magic news".
Reading the chart
Demand and supply are inferred from price, volume and level reactions.
| Behaviour | Read |
|---|---|
| Large bullish candles, closes near highs | Aggressive demand |
| Large bearish candles, closes near lows | Aggressive supply |
| Tight range | Bid/ask equilibrium |
| Long wicks (rejection) | Aggression blocked by opposing liquidity |
Common mistake — "It rose too much, it must crash" without checking whether aggressive supply returned. A trend continues until demand hits a wall of sellable liquidity.
Summary
- What it is: Interaction of buy and sell intent on the book.
- Key idea: Executed aggression matters, not an abstract count of "buyers".
- Deep dive: Volume analysis.
Bronze path — Module: What is a market. Next: Price. Index: Bronze path.