Making the right investment decisions can be complicated. We may read the news and find immense data on a stock that is doing pretty well in the market, and conclusively, everyone starts to talk about that stock, a few buy it, and on very rare occurrences, they end up earning great results.
But have you ever wondered the deep-rooted reason this happens? or understood the science behind how that stock is doing so well at that moment? How is its price on the rise? We have a straightforward answer to that; it is because of the Demand & Supply principle.
Before we dive deeper into how we can use the law of demand and supply to make the right investment decisions, let us first understand the law of demand and supply.
Law of Demand and Supply
The law of demand and supply is a universal concept where the price is a function of demand and supply. It is an economic model that determines the value in a market. It assumes that in a competitive market, holding all else equal, the unit price for a particular good, or other traded item such as labour or liquid financial assets, will vary until it settles at a point where the quantity demanded (at the current price) will equal the amount supplied (at the current price).
In simpler words, demand and supply will keep pulling and pushing prices in either way depending on their value in its market.
How do you make the right investment decision using the demand and supply approach?
There are a hundred reasons that could coherently affect the demand and supply of a particular company. Significant factors that could affect the demand and supply for stocks are economic data and corporate results. Great economists have tried and failed to predict, time and again, what could possibly be the central and foremost reason behind the fluctuation between the relation of demand and supply, and price and in retrospect can only be talked about and analyzed.
When the demand of a company rises and does not have supply to support it we should buy the stock. When the supply of a stock increases, without the demand to satisfy it, we should sell the stock. This could single-handedly take months of research before actually predicting the future of stock by an ordinary human being.
How do we simplify this process for you to make quick investment decisions?
- Cycle app helps you translate the demand and supply approaches into actionable buy and sell signals through its swift algorithms; offering signals that could take months of research to reach an enforceable decision.
- When supply does not meet demand, it shifts to a buy signal and when demand doesn’t meet supply then shifts to sell, and when both demand and supply meet, it gives a wait signal helping you make better investments.
To back this up, it gives a signal history of the performances of over 10000+ companies, and how using this approach has helped many make profits and save losses.
Please refer to How to use Cycle tutorials for learning how to make effective use of demand and supply principles with the help of various signal combinations in short term & long term investing.
