The 3-5-7 Rule: Your shield against losses in crypto

Tired of watching a bad trade wipe out weeks of gains? Professional traders use a simple yet devastatingly effective strategy: the 3-5-7 Rule.

Breaking Down the Numbers

The 3: Never risk more than 3% of your total capital on a single trade. If you have $10,000, that means a maximum of $300 per trade. It sounds conservative, but this way a streak of 10 consecutive losses only takes away 30% of the bankroll. The whales know this.

The 5: Your total exposure in all open trades does not exceed 5% of the capital. Let's say you have $50,000 in the account. Between the BTC you bought, the ETH you are shorting, and that experimental altcoin, your combined risk does not reach $2,500. This way, you don't have everything on one side of the market.

The 7: Here is the magic. Your winning trades must be 7% more profitable than your losing ones on average. If you lose $300 on a failed trade, your average gain must be around $210+ for the math to work out. This naturally forces you to be more selective: you only enter setups with a good risk-reward ratio.

Why it works

It's not just theory. Traders who consistently apply it see something surprising: even though they win less than 50% of their trades, let's say 45%, they end up with profits because the few that do win are significantly larger. It's the difference between playing to win them all and playing to win big.

Catch: requires discipline

The rule is simple, applying it not so much. When you see a pump of +15% and you have already opened 2 trades, the temptation to enter is brutal. But if you break the 5%, a correction of 10% liquidates everything. Those who last in crypto are precisely the ones who say “no” when they should.