Day Trading, Micro Trading, Intra-Day

Day Trading is conceptually the act of trading (speculating) during the same day. Another word for act of Day Trading that is used by brokers  is (Intra-Day) which means not holding a trade position past the closing bell of the stock Market. Which is 4:00 for regular markets and 4:15 for the E-Mini markets.

The least capital needed to hold position, which is called (initial margin) is found  with Day Trading. In general to trade Futures and Forex with the least Capital at risk ,you would choose Intra-Day Trading.

When you hold a position for a short period of time, 1 minute, 5 minutes, or 1 hour, this style of Intra-Day is called Micro Trading. TradeFoxx promotes this kind of trading that allows for short periods of exposure to risk, this type of trading can be considered income generation trading.

Another name for Micro Trading is also considered (scalping style), which again is taking profits on small price changes. When micro trading you must have extreme control of your risk, because you are willing to take small profits you must also take small loses. We prefer the use of the term of micro trading because you may be in a trade for 1 hour and that conceptually breaks away from Scalping Style. In general you could use the two terms interchangeably.

Risk and Reward is math that must be followed strictly when micro trading. The minimum ratio should be 1 to 1. Meaning if you are willing to risk $100 then you should be willing to win $100.  In general you should be willing to win 1.5 to 2.5 to lose 1. meaning the risk should be held stead fast $100 but your target should $150 to $250.

This simple concept keeps your losing trades at bay and lets your profits run. There is one twist to the math the Risk must be evaluated first before looking at the profit target. Why the risk first; simple if the risk value is not taken into account first your trades will risk losing more because you did not take into account the natural fluctuations of price to reach your profit target.

TradeFoxx only promotes trading Renko or Range Charts for entering and exiting a trade position. There are many reasons why you should trade Renko or Range which is beyond the scope of this article. The primary reason when it comes to risk/reward math is Renko allows you to calculate risk easy. Price divergence is when price gives resistance to going in the direction of profit but eventually will. This is the natural movement of price, it is not linear all the time.  In general using Renko Charts the maximum risk should be two boxes in the opposite direction of your profit, therefore this is where you would put your hard stop.

Now that you have set your hard stop, now finding  your profit target easy:   1 to 1,  1 to 1.5  1 to 2  or 1 to 2.5 . So if you are willing to lose two boxes then you should be willing to win two boxes, or win 3 and half boxes or  4 boxes. We feel in general more than 4 boxes is pushing it for Scalping styles.

Below is an illustration of the concept. how to set Risk to Reward for Micro Trading.