In last week’s article, we discussed one of the areas that novice traders mistakenly enter trades only to get stopped out by the professionals. This week, I will revisit an older topic that is related. In that article, I answered an email from a student:

“I want you to tell me the importance of how a price comes back to a level? What is the significance of how it arrives, if it comes in like a glider plane or a lead balloon? I think what is important is how it leaves but the arrival is an odd’s enhancer. I am a ‘why’ guy. So why is arrival so important?”

This is a great question and the answer highlights the true market forces behind price movement, fear and greed. I want you to think about a flagpole. If I climbed to the top of that pole it would hold my weight. However, as more and more people climbed up to the top of that same pole, eventually it would bend and break from the added weight. Prices are similar.
Stock prices rise because of demand. The demand being greater than the supply causes buyers to outbid each other and climb the pole. At some point, the buyers have exhausted themselves and everyone who wanted to buy has already done so or is prevented from buying due to the high cost.

Prices start to fall as fear takes hold. Most investors and traders will start to panic when the price starts moving against them or their stops will be triggered. If there was a lot of buying pressure and large green candles going into the supply level, there will be few buyers to stop the collapse and catch the supply being dumped onto the markets from stop orders being triggered.

Compare this with a gradual climb that features smaller green candles and some small pullbacks to shake out weak traders. As prices fall away from a supply level in this scenario, they will be met with less stop orders and more buying pressure as the demand was not exhausted on the way up.

Stocks

Arrival to demand zones are also important. If you arrive to the demand with large red candles signaling panic and fear, you are likely to have a bigger and better bounce. The large red candles signal that everyone who wanted to sell has now exited the stock. When buyers step in they must raise their bids quickly to attract a seller who may still be around.

If the arrival to the demand zone is quiet, there are still many worried holders of the stock who are looking to sell at a smaller loss when the bounce occurs. This added supply will mute the bounce of price from the demand level.

Stocks

Most novice traders are taught to buy AFTER prices have rallied. This is where we see them climbing to the top of the flagpole. As professionals, we want to be buying wholesale prices.
We buy when prices are cheap, not expensive. The same is true for selling. Selling after a drop in price is silly. You should sell before the drop and at a supply zone. Knowing where these zones lie is critical to being successful in trading and is part of Online trading Academy’s core strategy.

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Neither Freedom Management Partners nor any of its personnel are registered broker-dealers or investment advisers. I will mention that I consider certain securities or positions to be good candidates for the types of strategies we are discussing or illustrating. Because I consider the securities or positions appropriate to the discussion or for illustration purposes does not mean that I am telling you to trade the strategies or securities. Keep in mind that we are not providing you with recommendations or personalized advice about your trading activities. The information we are providing is not tailored to any individual. Any mention of a particular security is not a recommendation to buy, sell, or hold that or any other security or a suggestion that it is suitable for any specific person. Keep in mind that all trading involves a risk of loss, and this will always be the situation, regardless of whether we are discussing strategies that are intended to limit risk. Also, Freedom Management Partners’ personnel are not subject to trading restrictions. I and others at Freedom Management Partners could have a position in a security or initiate a position in a security at any time.

Editors’ Picks

EUR/USD recovers some early losses driven by rising energy prices amid US-Iran war

EUR/USD recovers some early losses driven by rising energy prices amid US-Iran war

The EUR/USD pair claws back some of its early losses during the late Asian trading session on Monday, but is still 0.25% down to near 1.1780. Earlier in the day, the Euro declined sharply against the US Dollar as investors shifted to the safe-haven fleet amid the brutal war between Iran, Israel, and the United States, which broke out over the weekend.

GBP/USD targets 1.3500 barrier near moving averages

GBP/USD targets 1.3500 barrier near moving averages

GBP/USD rebounds from the daily losses, trading around 1.3450 during the Asian hours on Monday. The technical analysis of the daily chart indicates an ongoing bearish bias, as the pair trades within a descending channel pattern.

USD/JPY: Japanese Yen remains depressed vs. USD amid Middle East tensions; lacks follow-through

USD/JPY: Japanese Yen remains depressed vs. USD amid Middle East tensions; lacks follow-through

The USD/JPY pair catches fresh bids at the start of a new week and climbs back closer to last week's swing high, though it lacks follow-through and remains below the 157.00 mark through the Asian session. A coordinated US-Israel military strike on Iran marks a dramatic escalation of geopolitical tensions and unsettles global markets. 


Editors’ Picks

WTI retraces sharply to $70, eyes on Strait of Hormuz oil flows

WTI retraces sharply to $70, eyes on Strait of Hormuz oil flows

West Texas Intermediate, the US crude oil benchmark, is retracing its spike to above $73 in the Asian session on Friday. WTI jumped to its highest since June 2025 after joint military strikes by the US and Israel against Iran over the weekend. Traders now assess the oil supply flow through the Strait of Hormuz for further cues. 

Gold looks further north as Iran war boosts haven demand

Gold looks further north as Iran war boosts haven demand

Gold is taking a breather after the initial run to over one-month highs near $5,400, kicking off the new week with a bang. A global flight to safety theme, following the US-Israel joint attacks on Iran over the weekend, bolstered the demand for the traditional store of value, Gold.

AUD/USD fills weekly bearish gap against retreating USD; retakes 0.7100

AUD/USD fills weekly bearish gap against retreating USD; retakes 0.7100

The AUD/USD pair rebounds following the weekly bearish gap opening to the 0.7030 area, or the lower end of a three-week-old range, and climbs back above the 0.7100 mark during the Asian session.

Bitcoin, Ethereum and Ripple under pressure as key supports face breakdown risk

Bitcoin, Ethereum and Ripple under pressure as key supports face breakdown risk

Bitcoin, Ethereum, and Ripple prices trade on the back foot at the start of this week on Monday, after extending losses in the previous week. BTC is on the brink of a breakdown, ETH is capped below key resistance, and XRP risks a crack of the trendline.

The market is paying for insurance, not apocalypse

The market is paying for insurance, not apocalypse

As expected, this morning felt less like a Monday market open and more like a fire drill. Futures screens flickered red. S&P contracts down almost 1%. Nasdaq off 1.2%. Brent leaped 13% through $80. Gold rose 1.6% toward $5350 before paring some gains. The dollar is strutting mildly. The Swiss franc is quietly doing what it always does in a storm, catching some safe-haven flows.

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