If you want to understand the financial market, you need to know this: what is the difference between buying pressure and selling pressure?

Have you ever wondered why stock prices fluctuate mainly based on certain principles? Why do they sometimes surge dramatically and other times plummet like falling rocks? The answer lies in buying pressure and selling pressure, which investors often refer to as “demand and supply,” the main forces driving the financial markets.

Let’s understand this fundamental force better. Once you grasp it, trading stocks won’t be as difficult as you think.

What are buying and selling pressures? Their role in stock prices

Buying pressure (Demand) is the willingness of buyers to pay for goods or, in the case of the stock market, investors who want to buy shares at various prices.

Selling pressure (Supply) is the volume of goods or shares that sellers are willing to offer at different prices.

When buying pressure exceeds selling pressure, stock prices tend to rise. Conversely, when selling pressure exceeds buying pressure, prices tend to fall.

According to the law of demand, how are the quantity purchased and the price of a product related?

To put it simply:

• Price decreases → Demand increases (according to the law of demand) Investors become eager to buy more.
• Price increases → Demand decreases Investors hold back their purchasing decisions.

Supply signals the opposite:

• Price increases → Sellers are willing to sell more because of higher profits.
• Price decreases → Sellers hold back on selling due to lower profits.

Where do buying and selling pressures “meet”?

This is called equilibrium (Equilibrium), the price point accepted by the market, where actual transactions occur.

If the price moves above the equilibrium point:

• Sellers want to sell more (higher profits)
• Buyers hold back (perceived as expensive)
• Result = inventory increases, and prices return to equilibrium

If the price drops below the equilibrium:

• Buyers want to buy more (lower prices)
• Sellers hold back (lower profits)
• Result = shortages, and prices rise back to equilibrium

Factors driving buying and selling pressures in the stock market

What causes buying pressure to push prices up?

1. Market liquidity - When there’s plenty of money in the market, investors are eager to find investment opportunities.
2. Good company news - When profits are strong and performance is growing, investors rush to buy.
3. Market confidence - When investors see a bright future, they are eager to buy.
4. Low interest rates - Why keep money idle when you can invest in stocks for better returns?

What causes selling pressure to push prices down?

1. Bad company news - Falling profits, losses, shareholders eager to sell.
2. Market concerns - Signs of economic downturn prompt investors to liquidate holdings.
3. New tax policies or regulations - That impact profitability.
4. Sensitivity to substitutes - If prices are high, investors might abandon this stock to buy others.

How to trade stocks using the buy-sell pressure principle

1. Candlestick signals

Green candlestick = Buying pressure pushes prices up; investors are eager to buy.

Red candlestick = Selling pressure pushes prices down; investors are eager to sell.

Doji (Doji) = Balance between buying and selling; no clear direction; uncertainty.

2. Trend analysis (Trend)

If prices make new highs consistently = buying pressure wins, continues upward (Uptrend)

If prices make new lows consistently = selling pressure wins, continues downward (Downtrend)

If prices move within the same range = balance of forces, wait for opportunity.

3. Find breakout points (Breakout)

When prices consolidate in a narrow range and then break out, it signals:

• Break above = buying pressure wins, prices continue upward (buying opportunity)
• Break below = selling pressure wins, prices continue downward (selling opportunity)

Example of trading based on buy-sell pressure

Case 1: Uptrend with ongoing momentum (Rally Base Rally)

Price rises → consolidates in a range → good news arrives → buying pressure breaks the upper boundary and continues upward.

Trading: Enter at the breakout point above, set stop-loss at the lowest point of the consolidation.

Case 2: Downtrend with ongoing momentum (Drop Base Drop)

Price plunges → consolidates in a range → bad news arrives → selling pressure breaks the lower boundary and continues downward.

Trading: Enter at the breakout point below, set stop-loss at the highest point of the consolidation.

Summary

The balance of buying and selling pressure is the core of price movement. If you understand that:

• When buying pressure wins, prices go up.
• When selling pressure wins, prices go down.
• When forces are equal, the market is indecisive.

You will be able to read the market as if reading a menu. Learning doesn’t end here because each stock has its own characteristics. Practice by analyzing real charts in the market until the picture becomes clear. With enough practice, you’ll learn how professional investors read charts.