What is the 7% loss rule?
In simple terms, this rule protects you from crippling losses and keeps you in the game for the long run. For example, if your account size is $10,000, 7% of that is $700. According to the 7% rule, $700 is the maximum you should be willing to lose on a single trade, no matter how promising the opportunity might seem. It’s a risk management strategy that limits how much of your trading capital you risk on a single trading position (3%), all open trades (5%), and total account exposure (7%). It helps traders avoid impulsive trades and balance risk for long-term profitability.The 3-5-7 rule is a trading risk management strategy that limits risk to 3% of your account per trade, restricts total exposure to 5% across all open positions, and sets a 7% profit target on winning trades. It helps traders control losses and improve long-term consistency.