Applied Digital Corporation (APLD) shares are sliding on Thursday, and some analysts think the culprit might be the reversal in NVIDIA Corporation (NVDA) after its strong earnings report. But there's a more interesting story playing out on the chart right now.

There's a specific price level where a bunch of traders are likely setting up their exit strategy. If enough of them place sell orders at the same spot, it creates resistance that can cap the rally. That's why Applied Digital deserves a closer look today.

Here's the thing about trading: most people fail because they're essentially winging it. No strategy, no rules, no clear idea of when to get in or out. They're just making educated guesses at best, wild stabs in the dark at worst.

And guessing is a terrible plan. When you don't have concrete levels to work with, emotions take over. Fear and greed make the calls instead of logic, and that's when bad decisions pile up.

Good traders do something different. They identify important price levels and use them as guideposts for their decisions. Applied Digital's chart offers a textbook example of how this works.

When the stock was heading south, smart traders waited for it to hit $21.50 before pulling the trigger on buy orders. Why that number? Because there was support there previously. Former support levels have a habit of acting as support again because of how trader psychology works.

Think about what happened: people who sold in October around $21.50 probably kicked themselves when the stock rallied afterward. When it dropped back to that level, they got a second chance and placed buy orders to get back in. All those orders stacking up at the same price created a floor under the stock.

Now those same traders who bought at $21.50 are scanning the chart for an exit. Many of them are eyeing $30.70 as their target. Notice something interesting about that level? It was support before, and support has this annoying tendency to transform into resistance.

Here's why: some traders bought shares around $30.70 on the way down and immediately regretted it when the price kept falling. Those people are sitting there right now, waiting for a chance to sell at breakeven and move on with their lives. If enough of them place sell orders at $30.70, it creates a ceiling that's hard to punch through.

When you pile up enough regretful buyers all trying to exit at the same price, you get resistance. It becomes a logical spot to take profits if you're trading this stock.

The difference between traders who make money and those who don't often comes down to this: having a plan versus guessing. Successful traders know their entry points and exit points before they even click the button. Everyone else is just hoping for the best.