Stock Market Basics

Demand and Supply (Stock Market)

The core mechanism that sets stock prices — when buyers (demand) outweigh sellers (supply) at a price, the price rises, and vice versa.

In the stock market, demand refers to how many investors want to buy a stock at a given price, and supply refers to how many are willing to sell at that price. A stock’s price is simply the outcome of these two forces meeting — a buyer and seller agreeing on a number.

The Basic Rule

  • More buyers than sellers at a price → price tends to rise, as buyers offer more to attract sellers
  • More sellers than buyers at a price → price tends to fall, as sellers accept less to attract buyers

See the full mechanism, with a worked example, in How Stock Prices Move: Demand, Supply, and Market Sentiment.