Stansberry Investor Hour The 2-to-1 Rule That Makes You Profitable
Mar 3, 2026
Steve Burns, trader and founder of New Trader U, explains trading as mathematical and systematic. He highlights risk-to-reward and the 2:1 rule, why win rates around 40–50% can still work, and how loss size and position sizing determine long-term profitability. He also covers volatility filters, entry signals like EMA crossovers, and building a disciplined, low-frequency edge in markets.
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Use A Minimum 2 To 1 Reward To Risk
- Do target at least a 2-to-1 reward-to-risk ratio before entering a trade.
- Steve Burns says a 50% win rate with a 2:1 ratio is profitable, so set profit targets and stops accordingly.
Plan For Drawdowns Using Recovery Math
- Expect drawdowns and plan position sizing so you can emotionally endure them.
- Steve Burns shows the math: a 10% drawdown needs 11% to recover, 50% needs a double, so size for tolerable drawdowns.
Cap Risk Per Trade At 1 To 2 Percent
- Do limit capital risk per trade to around 1% to 2% of total capital.
- Steve Burns explains 10 consecutive 1% losses equals a 10% drawdown and position sizing prevents ruin.
