Importance and Application of the 3-5-7 Strategy for Investors

The Importance of the 3-5-7 Strategy for Investors

Effective strategies play a significant role in every investor's journey to success. One of these is the 3-5-7 strategy. While finding profitable trades is the goal for beginners, the key point is effective risk management. Each trade comes with uncertainties; therefore, keeping losses under control provides sustainable profits in the long run.

Basic Principles of the 3-5-7 Strategy

The 3-5-7 strategy offers investors a clear framework, keeping them away from complex systems. It is based on three main criteria:

• Maximum loss per trade: Is limited to 3% of the total capital.
• Total risk in open positions: Should not exceed 5%.
• Target for winning trades: At least a 7% return should be aimed for.

Defining these limits encourages investors to adopt a more disciplined and planned approach.

Risk Management and Psychological Effects

One of the biggest problems for investors is making emotional decisions. Mistakes such as wanting to recover losses or over-excitedly trading during profits are often observed. The 3-5-7 strategy helps reduce such psychological traps, allowing for calmer management of losses. As a result, the investor can evaluate their trades more rationally.

Practical Application Example

Let's say you have 100,000 TL in your account. First, you need to determine your maximum loss: this is 3%, or 3,000 TL. You will adjust your position size in relation to your stop distance. If you have other trades open at the same time, you should consider your total risk. Finally, by determining your target, you will have created your trading plan.

Achieving Sustainable Success

The 3-5-7 strategy does not promise guaranteed profits. However, it is designed to help investors manage losses and increase their gains. Initially, it helps you gain discipline and, over time, allows flexibility in your strategy according to your experiences.

In the long run, the 3-5-7 strategy offers a simple and effective starting point for becoming a successful trader.