Supply and demand are fundamental concepts in trading and economics that play a crucial role in determining the price of assets or products. Here’s an explanation:

1. Supply: This represents the quantity of a particular asset, product, or security that is available for sale in the market. It is typically shown on the supply curve, which is a graphical representation of how much of an asset producers are willing to sell at different price levels. Generally, as the price of an asset increases, the quantity supplied also tends to increase because producers are motivated to sell more at higher prices.

2. Demand: This represents the quantity of a particular asset, product, or security that buyers are willing to purchase at various price levels. It is usually shown on the demand curve, which is a graphical representation of how much consumers are willing to buy at different prices. In general, as the price of an asset decreases, the quantity demanded tends to increase because more buyers are attracted to the lower prices.

The intersection of the supply and demand curves is known as the equilibrium price and quantity. This is where the market price settles because it’s the price at which the quantity supplied equals the quantity demanded.

In trading, understanding supply and demand dynamics is essential because they have a direct impact on the price movement of assets, such as stocks, commodities, or currencies. When demand for a particular asset exceeds its supply, the price tends to rise, and when supply outstrips demand, the price tends to fall.