What is the 7% rule in stocks?
Understanding the 7% Rule in Stocks According to this rule, if a stock falls 7–8% below your purchase price, you should sell it immediately—no exceptions. Overleveraging and Poor Risk Management Failed traders routinely risk 10%, 20%, or more. This mathematical reality is inescapable: If you risk 20% per trade, you only need 5 consecutive losing trades to lose approximately 67% of your account. With 10 consecutive losses, you’ve lost about 90%.In my experience, The 3 5 7 Rule of Stocks is almost magical! Never risk more than 3% of your total capital amount on a single trading position. The total risk for all positions should not exceed 5% of the trading capital. Each profitable trade should bring at least 7% more profit than each losing trade.