Although we have been offering our FTMO Accounts to retail traders for several years now, there are still many who do not understand the principle of Maximum Daily Loss. The following example will show why traders should be careful about open positions and why it is more important for traders to monitor rather the Equity curve than the Balance curve.
We try to explain our Trading Objectives to all our potential traders as regularly as possible, but there are still traders who do not fully understand the principle of the Maximum Daily Loss rule. Unfortunately, this is then compounded by a failure to comply with the terms of the Evaluation Process. The best way to explain this is with a specific example. The trader in the example below traded quite a lot of positions and even met our required Profit Target with his last trade.
He could be using a trend-following system strategy, waiting for suitable break-outs. These trading systems typically may experience many small losses over a period of time, but when the trade is successful, the profits are usually really high. However, it is also very important for us to keep track of how the trade was performing over time.
If we were not tracking open losses, we could consider this Verification passed and the trader would be allowed to trade on the FTMO Account.
However, when we look at the open losses, we find a very interesting thing. This trader reached a floating loss of -$71,096 just before the end of his Verification, which for a $200,000 account is a -35.54% loss. And that's a lot for any trader, not just the one trying to get an FTMO Account.
As you can see, the trader had a Verification with an unlimited trading period, so he did not have to rush anywhere to pass it (the same goes for any newly purchased FTMO Challenge). It is therefore completely unnecessary to open large positions without entering a Stop Loss (which is unfortunately the case here). Such an approach often shows the trader lacks discipline, does not follow risk management rules, and probably does not take trading as a serious way of making money. Combine all of that together and it becomes very likely that in the event of an unforeseen move, the assets in the account may fall beyond the Maximum Daily Loss. And this does not only apply to an FTMO Challenge or Verification, a trader can similarly lose an FTMO Account unnecessarily.
We often encounter beginner traders arguing that they were sure the market would definitely turn in their favour and that they don't understand why the rules in their FTMO Challenge or Verification are broken. We hope this article makes it clear that no investor should ever look only at their balance curve showing closed positions, but their equity curve.
For these reasons, we must also warn potential traders that we do not consider statements from MetaTrader because they do not show the progress of trades in the form of an equity curve.
AtFTMO, we understand that market conditions might vary and that’s why we offer our traders a generous10% Maximum Loss buffer and5% Maximum Daily Loss. These conditions are in a ratio of 1:1 (loss to profit), which is the top industry standard. Our major aim is to cooperate with experienced traders. And that’s also why we introduced the above risk parameters that should make them feel comfortable.
FAQs
At FTMO, we understand that market conditions might vary and that's why we offer our traders a generous 10% Maximum Loss buffer and 5% Maximum Daily Loss. These conditions are in a ratio of 1:1 (loss to profit), which is the top industry standard.
What is the stop out level in FTMO? ›
Stop out level is the specific percentage level, where, if your margin is equal or below, your broker starts closing your positions until the margin level is greater than the stop out level. If we say that stop out level is 70%.
What happens if you fail the FTMO challenge? ›
You will be removed from the Premium Programme if one of the following situations occurs: You fail the FTMO Account which is part of the Premium Programme. You fail 3 accounts regardless of the of the stage (FTMO Challenge, Verification, FTMO Account)
Does FTMO give free retry? ›
You can retake your Free Trial as many times as you want to make sure you are fully prepared for an FTMO Challenge.
How many people fail FTMO? ›
The FTMO challenge has a reputation for being extremely difficult to pass. Across FTMO's various account levels, it is estimated that only around 10% of traders are able to successfully complete the evaluation and become a funded trader. This means approximately 90% of those who attempt the challenge end up failing.
What is the biggest FTMO payout? ›
Dariusz from the USA exceeded everyone's expectations and made his dreams come true. As our FTMO Trader with a maximum allocation, he beat the previous record payout of $500,180 thanks to his profit of $1,206,225, the biggest payout in the industry!
Is Martingale allowed in FTMO? ›
We have already written about the martingale principle in forex trading, and we would definitely not recommend this system to our traders.
Can I trade without stop loss on FTMO? ›
In the case of traders attempting to obtain an FTMO Account or have already passed the Verification phase, the use of stop losses is virtually essential.
How hard is it to pass FTMO? ›
There is estimated to be a 90% fail rate of traders that take the FTMO challenge. The reason behind this is due to traders chasing the profit target with a time restriction in place. A trader doesnt know when a winning streak might occur, or when they may take a string of drawdowns.
Can FTMO be trusted? ›
Having successfully operated since 2015, we provided thousands of clients with their FTMO Accounts, and in total, we have paid out over $160 million. We've also been featured in Forbes and awarded by Deloitte and EY multiple times.
Risk per trade
How much should you be risking per one trade? In most textbooks and online education programs, you will learn that you should not be risking more than 2% per one trade. Although the answer to this is more complicated, let's start with saying that 2% risk per trade is a good base to start with.
What is the maximum loss violation of FTMO? ›
The Maximum Loss limit simply states that the equity on your trading account must not drop below 90% of the initial account balance at any given time during the account duration. That means that on the Normal risk account you cannot lose more than 10% of your initial balance.
What if I lose money in FTMO? ›
When you lose an FTMO challenge, you won't actually be losing something except for the fee amount that you paid for the challenge. However, you won't be able to continue with the challenge and your eligibility would be lost. What leverage is FTMO?
What is the 2 minute rule in FTMO? ›
During the FTMO Challenge & Verification, you can ignore the rule of not trading in the window of 2 mins before to 2 minutes after the specific releases. We don't enforce it as we want to make it easier for you to pass the evaluation process.
What is the maximum loss in a prop firm? ›
The Maximum Loss limit simply states that the equity on your trading account must not drop below 90% of the initial account balance at any given time during the account duration. That means that on the Normal risk account you cannot lose more than 10% of your initial balance.
What is the maximum loss on the funded trader? ›
This rule dictates that your current equity must not drop below -5% of the initial account balance relative to the highest recorded account balance. For example, with an initial account balance of $100,000 and the highest recorded balance of $106,000, the maximum overall loss is capped at $101,000.
What is the maximum loss per trade? ›
Among the widely used loss-limit rules are the 2% loss limit per trade and the 6% monthly loss limit. However, these percentages aren't sacrosanct and may vary based on your risk tolerance and trading skill level.
What happens if you lose money on FTMO? ›
When you lose an FTMO challenge, you won't actually be losing something except for the fee amount that you paid for the challenge. However, you won't be able to continue with the challenge and your eligibility would be lost.
