FTMO is one of the most well-known prop firms in the world, and for good reason — their rules are clearly documented, their funded conditions are competitive, and the two-phase evaluation model has become the industry template. But knowing the rules and truly understanding how they interact is the difference between passing and failing.
The Two-Phase Structure
FTMO uses a two-phase evaluation before granting a funded account. Phase 1 is the FTMO Challenge, and Phase 2 is the Verification. Both phases have the same risk rules, but different profit targets. You must complete both before becoming an FTMO Trader (their term for funded status).
Crucially, there is no time limit on either phase. You can take as long as you need — the only requirement is that you trade on at least four separate calendar days per phase. This removes the pressure of rushing toward a deadline and rewards disciplined, patient trading.
Rules Summary Table
| Rule | Phase 1 (Challenge) | Phase 2 (Verification) | Funded Account |
|---|---|---|---|
| Profit target | 10% of starting balance | 5% of starting balance | No target |
| Max overall drawdown | 10% of starting balance | 10% of starting balance | 10% of starting balance |
| Max daily loss | 5% of starting balance | 5% of starting balance | 5% of starting balance |
| Min trading days | 4 days | 4 days | No minimum |
| Time limit | None | None | None |
| Profit split | — | — | 80% (up to 90%) |
| News trading | Allowed | Allowed | Allowed |
| Weekend holding | Allowed | Allowed | Allowed |
Drawdown: How FTMO Calculates It
Both the maximum overall drawdown (10%) and the maximum daily loss (5%) are calculated from the initial starting balance of that phase — not from your current equity. This is static drawdown, which means your floor never changes no matter how much you profit.
On a $100,000 account, your absolute floor is $90,000. Your daily loss limit resets each day at midnight Central European Time. The daily loss is measured against your balance at the start of that trading day — so if you ended Monday at $103,000, your daily loss limit on Tuesday is $5,150 (5% of $103,000). Note that FTMO calculates the daily loss from the equity at the start of the trading day, not from the initial balance, which is a subtle but important distinction.
Key insight: Because FTMO uses static overall drawdown, every dollar of profit you make increases your buffer above the $90K floor. On a $100K account, reaching $110K profit gives you $20K of breathing room. This is one of FTMO's most trader-friendly features compared to firms using trailing drawdown.
Profit Targets: Phase 1 vs Phase 2
Phase 1 requires a 10% profit target — so $10,000 on a $100K account. Phase 2 cuts this in half to 5%, or $5,000. The intention is that Phase 1 proves you can hit a meaningful target while Phase 2 verifies consistency and that Phase 1 was not a fluke.
Many traders try to hit the Phase 1 target as quickly as possible. This is usually a mistake. With no time limit, there is no reward for speed — only risk. Aiming for 1–2% per week and completing Phase 1 in 5–10 weeks is far safer than swinging for the target in a few days.
The Minimum 4 Trading Days Rule
Each phase requires at least four calendar days on which you execute at least one trade. This rule exists to prevent traders from hitting the profit target in a single massive session, which would not reflect consistent skill. You cannot pass a phase — regardless of profit — until you have traded on four separate days.
In practice, this is easy to satisfy if you are trading regularly. The trap is for traders who hit the target on day 3 and do not realise they still need a fourth trading day. Make sure you trade at least one position (even a small one) on a fourth day before declaring the phase complete.
Funded Account: Profit Split and Scaling
FTMO's base profit split is 80% to the trader. This can increase to 90% through their scaling plan, which rewards consistent profitability over multiple payout cycles. There is no time limit, no minimum trading days requirement, and no profit target on the funded account — you simply manage your drawdown and request payouts when you choose.
News trading and weekend holding are both permitted on FTMO accounts, which sets them apart from many futures-focused firms. Traders can hold positions over major economic announcements and overnight into weekends, though FTMO does recommend caution around high-impact events.
Common Mistakes That Fail FTMO Challenges
- Oversizing positions early to chase the target quickly, then hitting the daily loss limit on a bad day.
- Forgetting the 4-day minimum and attempting to end the challenge before satisfying it.
- Confusing the daily loss calculation — it resets at midnight CET, not midnight local time.
- Trading aggressively in Phase 2 after passing Phase 1 — the same risk rules apply.
- Letting a funded account drawdown accumulate by not tracking the floor daily.
Tools to Help
Use these calculators to plan and monitor your FTMO challenge before and during trading:
- Challenge Calculator — enter your account size, target, and risk per trade to see how many winning trades you need and what daily loss exposure you carry.
- Drawdown Calculator — track your current floor and buffer to know exactly how much room you have before a breach.
- Max Daily Loss Calculator — calculate your exact daily loss limit based on your current balance so you know when to stop for the day.