FTMO challenge rules explained

The two-phase structure at a glance

FTMO uses a mandatory two-step evaluation before any funded account is issued. Phase 1 is the FTMO Challenge; Phase 2 is the FTMO Verification. Both phases share the same loss limits but carry different profit targets and time windows.

The purpose of the two-phase design is to demonstrate that a trader's edge is repeatable, not a single fortunate run. Passing Phase 1 under pressure and Phase 2 under relaxed conditions is how FTMO distinguishes consistent traders from lucky ones. Neither phase is optional, and FTMO does not offer an instant-funded or single-step route.

• Phase 1 (Challenge): 10% profit target, 30 calendar-day window, minimum 10 trading days.
• Phase 2 (Verification): 5% profit target, 60 calendar-day window, minimum 10 trading days.
• Funded account: no profit target, indefinite timeline, same drawdown limits apply.
• Both phases and the funded account share the same 10% maximum loss and 5% daily loss limits.

The daily loss rule: how FTMO actually calculates it

The 5% daily loss limit is the rule that eliminates most traders, and the confusion over how it is calculated makes it more dangerous than it looks on paper.

FTMO calculates the daily loss against the opening (starting) balance of that trading day — not against a trailing high-water mark on equity, and not against the initial account balance. On a $100,000 account that starts Monday at $103,500, the daily loss floor for Monday is $103,500 minus 5%, which equals $98,325. If your open and closed positions together bring equity below $98,325 at any point during that session, the account breaches.

The critical trap: open positions count. A floating loss on an unclosed trade moves your real-time equity and can breach the daily limit even though you have not pressed the close button. Traders who calculate risk only on closed trades routinely trip this rule mid-session on a position they were planning to hold overnight.

This differs from some other firms that calculate daily loss against the fixed initial account balance rather than that day's opening balance. FTMO's method means your daily floor rises on days after profitable sessions. Always recalculate before each session.

Maximum loss limit: static, not trailing

The 10% maximum loss limit is static — it is fixed from the initial account balance and does not trail upward as your equity grows. On a $100,000 account, the maximum loss floor is always $90,000, regardless of whether your account peaked at $108,000.

This is a meaningful advantage over firms that use a trailing maximum drawdown, where a period of strong gains lifts the floor and leaves you with less room before a breach. Because FTMO's 10% floor is anchored to the starting balance, a profitable trader retains the same absolute cushion throughout the challenge.

The rule covers both closed and open P&L. Your equity — balance plus any floating unrealised positions — must remain above the floor at all times. A large open loss on a position you have not yet closed can breach the maximum loss limit.

News trading, EAs, and other trading restrictions

FTMO prohibits opening new trades within two minutes before or after a high-impact news event. The restriction covers entry only; FTMO does not force-close positions held through news. If you have a position open going into a news event, it can remain open — but you cannot open a new position in the two-minute window either side.

The practical implication: if your strategy depends on entering immediately on a news release — NFP, CPI, FOMC announcements, ECB rate decisions — you cannot do that on FTMO. If your edge is news-volatility continuation trades entered after the initial spike, check that 'after' means more than two minutes post-release. When in doubt, sit out.

Expert Advisers (EAs) and algorithmic strategies are permitted on FTMO, with the caveat that FTMO monitors for strategies that exploit platform latency or pricing inefficiencies rather than genuine market edge. Copy trading is allowed. Hedging across accounts is not.

• No new trades within 2 minutes of high-impact news events (entry restriction only; open positions can be held).
• EAs and automated strategies: permitted, subject to FTMO's prohibited-strategy clause.
• Copy trading: permitted.
• Holding positions over the weekend: permitted on the standard account.
• Hedging across multiple FTMO accounts: not permitted.

FTMO account types: Normal, Swing, and Aggressive

FTMO offers three account variants. The Normal account is the standard, most widely used, and the one all default challenge rules above apply to.

The Swing account removes overnight and weekend holding restrictions more explicitly and is designed for traders who hold multi-day or multi-week positions. The core profit targets and loss limits are the same as Normal. This account type is worth checking if your strategy relies on holding through weekend gaps — although the Normal account also permits weekend holding, the Swing account is explicitly built around it.

The Aggressive account carries higher profit targets (20% in Phase 1, 10% in Phase 2) and a higher maximum loss limit (20%) with a higher daily loss limit (10%). It is designed for traders who size aggressively and prefer more room. The higher limits cut both ways: greater potential upside and a harder profit target to reach.

All three account types are available at the same account sizes. The rules differ between them; do not assume Normal account rules apply when trading an Aggressive or Swing account.

The number one reason traders fail the FTMO Challenge

It is not failing to hit the profit target. Experienced prop traders consistently report that the 10% profit target in Phase 1 is achievable for a trader with a genuine edge. The rule that ends most challenges is the 5% daily loss limit, breached on a single bad session.

The failure pattern is consistent: a trader takes on oversized risk on a high-conviction trade or a recovery attempt after an early loss. The position goes against them. They hold, hoping for a reversal. The open loss plus any other positions crosses the 5% daily floor — and the account is closed.

The practical defence is position-size discipline enforced before every trade, not after. Before entering, calculate the position size that limits your maximum loss — including worst-case scenarios on all open trades simultaneously — to well below the daily floor. The daily floor is not a target to approach; it is a hard wall you need to stay well clear of.

Minimum trading days and time windows

Both phases require a minimum of 10 trading days — days on which at least one trade is opened and closed. The time windows are 30 calendar days for Phase 1 and 60 calendar days for Phase 2.

Do not start a challenge if you cannot guarantee ten active trading days within the window. Traders who start a challenge and then face an unexpected absence find themselves forced into rushed, higher-risk trading in the final days to hit the minimum count — exactly the behaviour that triggers daily loss breaches.

There is no minimum profit per trading day. Closing a small position satisfies the trading-day requirement. The floor is a count of active days, not a quality threshold.

Sources & further reading

• FTMO official rules
• FTMO account types