#TradingTools101 The 3-5-7 rule is a popular risk management strategy in trading that guides traders on how to manage risk and set profit targets. It's a simple yet powerful tool that helps traders avoid major losses and increase their overall profitability.

Here's a breakdown of the rule:

3% Risk:

Never risk more than 3% of your total trading capital on any single trade. This helps limit the potential loss from a single trade and protects your overall portfolio.

5% Exposure:

Limit your total risk exposure for all open trades combined to 5% of your trading capital. This prevents over-exposure to the market and reduces the impact of volatility.

7% Profit Target:

Aim for a minimum of 7% profit on your winning trades. This helps you achieve a favorable profit-to-loss ratio and grow your capital.

In essence, the 3-5-7 rule helps traders stay disciplined, manage risks effectively, and potentially increase their profits by setting realistic profit targets.