What Moves Prices in the Financial Markets? Supply, Demand and How to Read Them on a Chart

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By Spencer Li, CFTe · Last updated: 26 October 2026

Only two things move prices in the financial markets, and they are supply and demand. When more people want to buy a stock at today’s price than want to sell it, the buyers have to offer more, and the price rises. When sellers outnumber buyers, they have to accept less, and the price falls. Earnings, interest rates, wars and new products move a price only by changing how many people want to buy or sell, and how badly they want to do it. So the useful question on any chart is which side is in a hurry, rather than what the news said.

I first wrote this post in April 2010. Quite a lot about the markets has changed since then, and the answer has stayed exactly the same.

Why do only two forces move a price?

Who decides that a stock is worth one cent more than it was a second ago?

Nobody does. That surprises most people the first time they think about it. The price on your screen is simply the last trade. Buyers post the prices they are willing to pay, sellers post the prices they are willing to accept, and a trade happens when one side gets impatient enough to take the other side’s price. If buyers keep taking every share offered at 50.00, the next seller asks for 50.01, and the price has moved up without anyone in a room deciding it should.

In the textbook graph from economics class, price and quantity both shift until the supply line and the demand line cross. A stock is a slightly stranger market, because the number of shares a company has issued barely changes from one week to the next. So the price does the moving.

Force	Who it is	What they want	What it does to price
Demand	Buyers, the bulls	To buy	Pushes it up
Supply	Sellers, the bears	To sell	Pushes it down

That constant fight between buyers and sellers is the whole engine. It can last a few seconds on a one-minute chart, or it can build a trend that runs for years, and it is the same two forces either way.

Is it the fundamentals, or is it supply and demand?

In the late 1800s, economists were stuck in an argument over where a thing’s value came from. One camp said it came from what the thing cost to make. The other said it came from how useful buyers found it. In 1890, Alfred Marshall settled it in his Principles of Economics with one sentence about a pair of scissors:

“We might as reasonably dispute whether it is the upper or the under blade of a pair of scissors that cuts a piece of paper, as whether value is governed by utility or cost of production.”

Traders still have the same argument, just with different words. One camp says profits move prices, and the other says charts do. Marshall’s answer works here too. The profits in the financial statements, the upcoming expansion plans, the new product and the dividend payments all matter, but they reach the price only through people deciding to buy or sell.

The trouble is that nobody can be sure, at any given moment, why people are buying or selling a share. You can guess, and quite often you will guess wrong.

That is where technical analysis comes in, which is simply the study of price and volume. It never tries to work out why there is supply or demand. It only measures that there is, and roughly how much, by watching how price and volume actually behave. Underneath it sits one assumption, which is that the information people already know about a company is mostly in the price, or “priced in”, as traders like to say.

So as a trader, what you buy and sell is the price itself, rather than the P/E ratio, which is price divided by earnings, or the return on equity. Price is what decides whether you make money or lose it. And what you think the price should be has no influence whatsoever on what it actually does, which is a lesson the market tends to teach everyone at least once, usually at some expense.

If you only have a few minutes a day for the markets, my free 15-minute swing trader checklist is the routine I run myself.

Why does good news sometimes push a price down?

On 23 July 2025, a trader on Reddit’s r/StockMarket asked a question that every new trader asks sooner or later: “Google Crushes Earnings… and the Stock Drops?” Alphabet had beaten forecasts on revenue and profit, and they wrote that the stock fell as much as 3% after hours. They called it “Classic Market Nonsense.”

It feels like nonsense. It is actually supply and demand doing exactly what it always does. The people who expected a strong report had mostly bought already, so a strong report added very few new buyers. Meanwhile, some holders who had been waiting for the number used it as their moment to sell. When the news is already in the price, good news can bring out more sellers than buyers.

I saw the same thing play out with the Fed. On 11 December 2025, the morning after the Fed cut rates by a quarter point, I told viewers of my weekly outlook that the cut “was kind of already priced in”, because most people had expected exactly that. During the announcement, small caps briefly broke above their previous swing high, and after the close they went back down.

The reason was in the details. Three of the twelve voters did not go along with the decision. One wanted a bigger cut, and two wanted no cut at all. The Fed’s own projections also pointed to only one cut in 2026. “So there is a bit of fear of the inflation coming back,” I said that day. The cut itself was good news. The fear was new, and the fear decided which side was in a hurry. The same logic is why a strong jobs report can sink stocks, which I explain in what the NFP means for traders.

Now, the trader on Reddit had a point too, and it is worth conceding. Alphabet opened the next session about 3.6% above its pre-report close and finished the day about 1.0% higher. By the close on 23 October 2026, it was about 68% above that same close of 190.23. Over months, the business does pull the price along. On 24 March 2026, with war headlines changing every day, I said in my outlook that the medium and long term trend “still responds to the longer term supply and demand”. That is the steady buying and selling pressure that things like earnings build over time. So fundamentals are one blade of Marshall’s scissors. Over a single day, though, the news and how people were positioned for it usually matter more.

Who actually moves the market?

Suppose you run a large fund and need to buy more of a stock than it usually trades in a whole day. You cannot simply press buy, because then you would be the demand, and you would push the price up against yourself before you were half filled. So big orders get cut into slices and bought over days or weeks, as quietly as possible.

That is the reason the bulk of the buying and selling that moves a big stock comes from institutions, rather than from retail traders. It is the traders and fund managers at banks, funds and other institutions, whom I called the “big boys” and “smart money” when I first wrote this in 2010. Their orders are large enough to tip the balance on their own. Most of the time, a retail trader is a passenger.

You will never see their order book. But you can see the footprints those slices leave in price and volume. Traders who follow the method that grew out of Richard Wyckoff’s work in the 1930s call one of these effort versus result. Volume is the effort, and the price move is the result. Heavy volume with a big move in the same direction says one side is winning easily. Heavy volume with very little movement says someone is absorbing everything the other side throws at them, and that someone usually has deep pockets.

Learning to read price and volume is how you get a window into what the big players are doing, so that you trade alongside them rather than against them.

Where is the trade in all of this?

If price is only supply and demand, where is the money?

It sits where the two forces are badly out of balance. Picture a stock that keeps getting bought every time it dips to the same area, week after week, while the sellers above slowly run out of shares to sell. Or picture the opposite, a level where every rally runs into a wall of sellers. When one side has quietly built up, the eventual move can be fast, and the aim is to notice the imbalance while it is forming rather than to chase the move after it has happened.

Do note that the market sets traps here. Price often pokes out of a range, pulls in everyone who chased it and falls straight back in, so the imbalance has to be real rather than just a wick through a line. I cover how to tell the two apart in how to tell a real breakout from a false one, and the bigger picture of where those levels sit in market structure.

Personally, I find that I do not need to stare at the screen to see any of this. A daily chart, checked once a day, shows who has been winning far more clearly than a five-minute chart does, and the free 15-minute swing trader checklist is the routine I use to do it.

FAQ

What moves prices in the financial markets?
Supply and demand. When more people want to buy than sell at the current price, the price rises. When more want to sell than buy, it falls. News moves prices only by changing that balance.

Do company fundamentals move the share price?
Yes, over time, but only by changing how many people want to buy or sell. Over a single day, what the market already expected usually matters more than the news itself.

Why does a stock fall after good earnings?
Usually because the good news was already priced in. The buyers had bought before the report, so the report brought out more sellers than new buyers.

What does “priced in” mean?
It means the market already expects the news, so the price moved before it arrived. The surprise, the gap between the news and what people expected, is what moves the price on the day.

Who moves the stock market the most?
Institutions such as banks and funds. Their orders are large enough to shift the balance of supply and demand, which is why their footprints show up in price and volume.

How do traders use supply and demand?
They look for a clear imbalance, such as buyers repeatedly stepping in at the same level, and look to position before the move it produces rather than chasing it afterwards.

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Have you ever watched a stock fall on great news, and did it change how you read the next earnings report? Let me know in the comments, along with which side you find easier to spot on a chart, the buyers or the sellers.

For the wider picture, start with my free trading guides.

And if you want a routine that reads supply and demand without hours at the screen, grab the free 15-minute swing trader checklist.

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About the author. Spencer Li is The 15-Minute Trader and the founder of Synapse Trading. He is a Certified Financial Technician (CFTe) with 15+ years of trading, run from 70+ countries. He holds a B.Acc and B.BM from SMU. Every trade he takes is public, dated, losses left in. He teaches rules-based swing trading in 15 minutes a day, one system for any market.

Education, not financial advice. Synapse Trading is not licensed by MAS to advise on investment products. Trading carries risk of loss, and past performance is not indicative of future results.

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Educational content only, not personalised financial advice. Trading carries risk, including loss of capital. Past performance is not indicative of future results. Synapse Trading is not licensed or regulated by MAS.