2019 Charts, page-114

It is interesting that some have sold or contemplating doing so.
I would have thought that now is the time to be contemplating an entry

If I was looking to take a position into AGY, now is pretty much the perfect level for an entry imo.

My logic?
We are currently at support (12.5 – 13) and have already tested the low side, (12.5)
An O/T is “imminent”
The risk / reward therefore is quite good.
We have been tracking sideways in the 12.5 – 15.5 range for 45 days & have tested 12.5 three times & 15.5 three times.
Someone has been accumulating around 13 – 13.5 for some time.
Volume has disappeared and as another poster @Barry Smithy has noted the Monthy (& weekly) chart is showing signs of slowing & a reversal (admittedly in slow motion) is possibly not far off.

So How can we plan a trade?
What are the risks vs the rewards.
The risk is that we will drop to the next support down around 10.5 – 11.
The reward is that we could rally up to the resistance at 15.5 & bearing in mind that if a rally does happen it will happen for a reason and so the potential rewards may be far in advance of just a normal swing in the range which would in any event make for a good return on a trade at this level.
So being at the support now we have a potential 0.02 risk and a 0.03 reward.

Option 1.
Risking 2% of our trade float. Calculate the trade size using a 14 day ATR.
Assuming a $20,000 trade float we can purchase 23,025 shares & includes entry & exit costs.
The calculations are based on a share price of $0.13 and a stop loss exit somewhere below the support are (capital at risk / 2*ATR14)
The stop loss then will be 0 .114 or roughly .01 below support & if hit will result in a 13.2% loss on the trade but only a loss of roughly $400.00 (2%) of the trade float.
A sale price at 0.145 just below resistance would return $312 or 10% profit net of costs. That would be 65 times better than investing the same amount in a bank at 1.5% p/a.

Option 2.
Risking 2% of our trade float but calculating the trade size based on the risk per share.
Assuming a $20k trade float we can purchase 20000 shares.
The calculations are based on the risk per share. ie Trade capital at risk / The risk per share. In this case 400.00/0.002.
The stop loss is 0.112, again below the nearest support & would result in a 2% loss of the trade float of aprox. $400 if hit. But results in a 15.25% loss on the trade if the stop is hit.
The potential profit if exiting at .145 is $216 or 10.25% return net of costs.

Option 3.
Risk the lot & hope for the best.
Assuming a trade float of $20,000 we can buy 153,730 shares.
If support fails & the sp drops to the same level as the other two exapmles (0.0114) the trade would be down $2892 or 14.6% of the trade float.
If the trade was successful & closed at 14.5 a return of $2272.95 or 11.36% would be achieved.
That is 346 times better than if the float was invested at 1.5% in a bank but the risk is infinitely higher for a similar % return.

The question that one needs to ask is that what risk is acceptable when investing ones hard earned dollars and what are the expectations of the return.

So, why would I be selling now if I believed that the sp was at support?