What should your target heart rate be for exercise? Good question, but really the answer is “it depends.” Why are you exercising? Are you exercising to “lose weight” or “become fit” or "gain muscle?"
If you are exercising to become fit, then aerobic exercise is a reasonable choice for overall heart health. You should target between 65-85% of your maximum heart rate. Your maximum varies by age and individual, for more information (http://en.wikipedia.org/wiki/Heart_rate).
Honestly, if you want to lose weight or gain muscle, I actually recommend you “not” perform aerobic exercise and instead recommend interval training (http://en.wikipedia.org/wiki/Interval_training) or resistance training (weight lifting). As it turns out research is actually finding that interval training is better than aerobic exercise at building up heart health.
If you want further pointers on good resources in either interval training or weightlifting, just ask. Dr. B himself recommends aggressive weightlifting as the best exercise for diabetics.
