Section 1 · Stock Fundamentals
Supply & Demand in the Market
The single force that moves every stock price, every second.
More buyers than sellers = price goes up.
Every price movement is supply and demand in action. When a company announces great earnings, demand spikes — buyers flood in faster than sellers can keep up, so price rises. When bad news hits, supply overwhelms demand — sellers dump shares and price falls. Understanding this is the foundation of every trade you will ever make.
3 things to know
Price is always finding the level where buyers and sellers agree to trade.
News, earnings, and rumors all instantly shift the supply/demand balance.
Momentum traders profit by getting in early when demand is just starting to surge.
Dive Deeper
Before catalyst
- Stock flat at $20 for 3 days
- Volume: 200K shares/day (avg)
- Balanced buyers and sellers
- Spread: $0.02
- No news, no catalyst
After catalyst
- FDA approval announced 8 AM
- Pre-market volume: 2M shares (10×)
- Buyers overwhelm sellers 10:1
- Price gaps to $28 (+40%)
- Spread widens to $0.25 at open
Key vocabulary — tap each card
Practice
The supply/demand cycle in real time
Catalyst hits
News creates an imbalance. Buyers flood in faster than sellers can provide shares.
Price rises
Sellers raise their asks. The bid chases upward. Every new trade prints at a higher price.
Momentum builds
Rising price attracts more buyers. Volume accelerates. RVOL spikes above 5×.
Supply dries up
Sellers have filled their orders. Asks thin out above — a potential gap forms.
Equilibrium restores
New supply meets demand at the new higher level. Price stabilizes. Volume declines.
Did you know?
During the 2021 meme stock frenzy, GameStop's bid-ask spread briefly hit $10 wide — meaning buyers and sellers were $10 per share apart on a stock worth ~$200. Pure chaos.