The 3-5-7 rule
The 3-5-7 rule caps risk three ways. Three percent on one trade, five percent in one market, seven percent across everything open.
In depth
Take a 10,000 dollar account. Three percent is 300 dollars, the most any single trade may lose. Five percent is 500 dollars, the most at risk in one market at a time. Seven percent is 700 dollars, the ceiling for everything open at once. The caps stack, so the smallest one binds first.
Not everyone means the same thing by the name. Some traders use it as three open trades, five percent per trade, and a review every seven days. Five percent of an account on one trade is a lot. Treat that version with care. The numbers matter less than picking one set and keeping it.
Why it matters
Without a cap you size by feel, and feel is loudest right after a loss. A 20 percent hit needs a 25 percent gain to get back to flat. Caps also stop you owning six versions of the same bet. Three tech names moving together is one trade wearing three tickers.
TraderLog will not enforce the caps, but it shows whether you kept them. Trades import from Schwab, IBKR or CSV. The calendar puts each day's profit or loss in one square. Write the caps in that day's journal entry, then read max drawdown on the stats page.
Frequently asked questions
Three percent risk on one trade, five percent in one market, seven percent across all open positions.
The idea of a written cap is sound. Start smaller than 3 percent per trade while you learn.
Keep your 3-5-7 rule trades on the record in TraderLog
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