Many traders dive headfirst into studying candlestick patterns and technical indicators, only to frequently stumble in market fluctuations. Where is the problem? To put it simply, it's because they fail to see through the underlying logic of trading.

All price movements, when you get down to it, are the sum of decisions made by all market participants. Imbalance of supply and demand, disagreements and consensus among traders, the inertia of capital decisions—these are the true engines driving market operation. Technical indicators are just surface reflections of phenomena; detached from the fundamental logic, they’re like trying to catch water without a source—no matter how much you struggle, it’s futile. Only by understanding this underlying pattern can you escape the vicious cycle of chasing highs and selling lows, and build a trading system capable of sustained profitability.

**The Truth of the Market: Human Nature and Capital in the Game**

What is the market? It’s a collision of countless participants’ (institutions, retail investors, speculators…) human decisions. Behind every transaction, there’s a hidden judgment about future trends. Greed and fear intertwine, information gaps and cognitive differences clash—these elements combine to form the trajectory of price fluctuations.

Therefore, the fundamental logic of trading boils down to two elements: first, the collective decisions of participants; second, the supply and demand game of capital.

Trading behavior always revolves around one thing—“expectation”—buying is betting on prices rising, selling is betting on prices falling. Because everyone’s expectations differ, disagreements arise. And the premise for a transaction is precisely this disagreement. Imagine if everyone in the market had the same idea—either all buyers or all sellers—then it would be a standoff, and no trades could happen.

What ultimately determines the price? The potential supply and demand of capital. On the surface, each transaction’s buy and sell volumes are equal, but behind the scenes, what’s hidden is how much capital at the same price level is willing to buy and how much is willing to sell—this imbalance is the key to determining the price movement.