Many traders struggle with consistent profitability due to poor risk management, emotional decision-making, or lack of experience. FTMO’s trading rules are carefully structured to filter out undisciplined traders and reward those who can demonstrate responsible and profitable trading strategies. By setting clear guidelines such as profit targets, maximum drawdowns, and time constraints, FTMO ensures that only the most capable traders receive funding.
What is FTMO?
FTMO is a proprietary trading firm that funds traders after they pass a two-step evaluation process. The firm offers capital to traders who demonstrate good risk management and profitability. FTMO allows traders to keep up to 90% of their profits while providing access to high-quality trading conditions.
FTMO’s model ensures that traders operate with discipline and proper risk management strategies. Unlike traditional brokerages, FTMO profits from traders who successfully manage risk rather than from commissions or fees on losing trades. This encourages traders to develop sustainable trading methods.
FTMO Trading Rules
To maintain discipline and risk management, FTMO has set strict trading rules that every trader must follow. Below are the key rules traders need to follow to stay compliant and avoid losing their funded account.
1. Two-Step Evaluation Process
To become an FTMO-funded trader, you must complete a two-step evaluation process:
- FTMO Challenge: You must meet specific profit targets within a set period while maintaining risk management rules.
- Verification Stage: A second phase where traders confirm their ability to trade consistently and responsibly.
If you successfully complete both phases, you become an FTMO-funded trader and receive a funded account to trade with the firm’s capital.
The challenge ensures that only disciplined traders who can adhere to risk management principles qualify for funding. Traders who fail must evaluate their mistakes before attempting the challenge again.
2. Profit Targets
To pass the evaluation, traders must meet a profit target:
- FTMO Challenge: 10% profit in 30 days.
- Verification Stage: 5% profit in 60 days.
Once funded, there are no fixed profit targets, but traders must remain profitable to continue trading.
Meeting these profit targets requires a well-defined strategy. Many traders rely on technical and fundamental analysis to find opportunities in the market while maintaining risk management.
3. Maximum Daily Loss (Drawdown Limit)
This rule ensures that traders do not risk too much capital in a single day. The daily loss limit is:
- 5% of the initial account balance per day.
- If you exceed this limit, you fail the evaluation and lose your account.
Example: If your account balance is $100,000, your maximum daily loss limit is $5,000. If your loss reaches this amount, your account will be closed.
To avoid hitting the daily loss limit, traders must carefully monitor their open trades, use stop-loss orders, and avoid overleveraging.
4. Maximum Overall Loss (Total Drawdown)
FTMO also has an overall loss limit, which is the maximum amount of money you can lose before your account is closed.
- Maximum Overall Loss: 10% of the initial balance.
- Example: If your account balance is $100,000, the maximum you can lose in total is $10,000.
This rule ensures traders do not take excessive risks over time.
A key strategy to avoid breaching the overall loss limit is maintaining a consistent risk-reward ratio. Traders who risk 1-2% per trade tend to have higher chances of success.
5. Trading Period
- FTMO Challenge: 30 days to achieve the profit target.
- Verification Stage: 60 days to confirm trading consistency.
- Funded Account: No strict time limits, but responsible trading is required.
Traders should plan their strategies based on the trading period. Short-term traders may focus on scalping and day trading, while swing traders may take longer positions.
6. Minimum Trading Days
FTMO requires traders to be active for a minimum number of days to pass the challenge:
- Minimum of 10 trading days in each phase.
This ensures traders are not achieving profit targets by chance but through consistent trading strategies.
Consistency in trading performance is key to long-term success. Traders should avoid excessive risk-taking just to meet the minimum trading days requirement.
7. Trading Leverage
FTMO provides traders with leverage to maximize trading potential.
- Standard leverage is 1:100.
- Traders can select different leverage options depending on their risk appetite.
Leverage can amplify profits but also increases risk. Proper risk management, such as position sizing and stop-loss placement, is necessary when trading with leverage.
8. Restricted Trading Practices
FTMO enforces strict rules against unfair trading practices, such as:
- HFT (High-Frequency Trading)
- Copy Trading & Account Mirroring
- News Trading with High Volatility (e.g., trading during major economic news events)
- Arbitrage Trading
- Exploiting Platform Glitches
Failure to follow these rules may result in account termination.
Many traders mistakenly believe that automated strategies will guarantee success. However, FTMO evaluates traders based on discipline and strategy, not just algorithmic performance.
9. Weekend and Overnight Holding
- FTMO traders can hold trades overnight.
- FTMO traders cannot hold trades over the weekend unless they have a Swing Account.
Traders should be aware of market gaps and potential risks associated with holding trades overnight or over the weekend. Proper analysis of market conditions can help mitigate risks.
10. Payout Structure
Once funded, traders receive payouts based on their profits.
- Standard Payout Ratio: 80% to the trader, 20% to FTMO.
- With Scaling Plan: Traders can earn up to 90% of profits.
- Payouts are made monthly or bi-weekly depending on the trader’s preference.
FTMO’s payout system is one of the most attractive aspects for traders, as it allows them to earn significant profits without risking their own capital.
Conclusion
FTMO is an excellent opportunity for skilled traders to access large amounts of trading capital while following strict risk management rules. Understanding and adhering to FTMO’s trading rules is essential for success. By following these guidelines, traders can maximize their potential while staying within FTMO’s risk parameters.
Frequently Asked Questions (FAQs)
What happens if I fail the FTMO Challenge?
If you fail the FTMO Challenge by exceeding the maximum loss limit or not meeting the profit target, you will not be able to proceed to the Verification stage. However, FTMO allows traders to try again by purchasing a new challenge. Additionally, if you end the challenge with a profit but do not meet the target, FTMO may offer a free retry under certain conditions.
Can I trade news events on FTMO accounts?
FTMO does not allow high-impact news trading on its standard accounts. If you trade right before or during major economic announcements with high volatility, your account may be flagged for violation. However, FTMO does offer Swing Accounts, which allow traders to hold trades through news events and weekends.
How long does it take to get my FTMO payout?
FTMO traders receive payouts based on a monthly or bi-weekly schedule, depending on their preference. The first payout is typically available after 30 days of trading on a funded account. After that, traders can request bi-weekly payouts.
Can I use expert advisors (EAs) or automated trading strategies?
Yes, FTMO allows the use of expert advisors (EAs) and automated trading strategies, as long as they do not exploit platform glitches, engage in arbitrage trading, or violate risk management rules. High-frequency trading (HFT) and copy trading from external sources are not allowed.
What is the FTMO Scaling Plan?
The FTMO Scaling Plan is designed to reward successful traders by increasing their account balance over time. If a trader achieves a 10% profit in four consecutive months while maintaining proper risk management, FTMO increases their account balance by 25%. Traders can scale their accounts up to $2 million under this plan.
Can I trade cryptocurrencies, indices, or commodities on FTMO?
Yes, FTMO allows traders to trade a wide range of instruments, including forex pairs, cryptocurrencies, indices, commodities, and stocks. However, traders should check FTMO’s official website for the latest list of available assets and specific trading conditions for each instrument.
