The 3% Rule is one of the core principles of risk management during the funded phase.
It defines the maximum loss you can take on a single trade to ensure your account remains protected and your trading sustainable over time.
What Does the Rule Mean
Traders must not lose more than 3% of their Initial account balance on a single trade.
This applies to both individual trades and multiple positions that belong to the same trading idea.
For example, if you open several entries in the same direction on one pair, they will be counted together as one trade.
Splitting a trade into smaller positions does not bypass the rule – they are all evaluated as one.
If the total loss on that trade idea exceeds 3%, it is considered a hard breach, which will lead to account termination.
Example
Let’s say you have a funded account of $100,000.
The maximum allowed loss on any single trade is $3,000 (3% of your initial account balance).
If your stop-loss or combined open positions on one idea go beyond this limit, the account will be breached.
Why Does the 3% Rule Exist
This rule is designed to help traders manage risk like professionals.
It prevents oversized trades and emotional decisions, ensuring that even one losing trade does not compromise your overall funded status.
By following this rule, you protect your capital, your consistency, and your long-term profitability.
Tip for Traders
Before entering any trade, calculate your risk based on your stop-loss and position size.
If the potential loss exceeds 3% of your Initial Account Balance, reduce your lot size or adjust your stop-loss accordingly.
This simple habit separates disciplined traders from risky ones – and is the foundation of long-term success.