FTMO Rules, Evaluation Process & What to Expect

Understanding FTMO rules before you risk your challenge fee is the difference between a funded account and a wasted attempt. Most traders who fail don't lose because of bad trades. They lose because they misunderstand a rule, miscalculate a drawdown limit, or get caught off guard by a restriction they didn't know existed.

This guide covers every rule you need to know across FTMO's evaluation phases and funded accounts, including the new 1-Step challenge format launched in early 2026.

How the FTMO Evaluation Process Works

FTMO now offers two paths to a funded account: a 2-Step challenge and a newer 1-Step challenge. Both require you to hit profit targets while staying within strict loss limits. The rules differ between the two, so knowing which path you're on matters. FTMO supports cTrader, MT4, MT5, and DXtrade, so you can pick the platform that fits your workflow.

The 2-Step FTMO Challenge

The classic format has two phases. In Phase 1 (the FTMO Challenge), you need to hit a 10% profit target on your account. In Phase 2 (Verification), the profit target drops to 5%. Both phases share the same drawdown rules, and both now have unlimited time to complete.

Both phases now have no time limit, so you can trade at your own pace. But don't confuse "no time limit" with "no pressure." Every other rule still applies while the clock isn't ticking.

The 1-Step FTMO Challenge

Launched in February 2026, this format compresses the evaluation into a single phase with a 10% profit target. It's faster, but the drawdown rules are tighter (more on that below), and it includes a Best Day Rule that the 2-Step challenge phase doesn't have.

Both paths lead to the same destination: an FTMO Account where you trade simulated capital and earn a share of your profits.

FTMO Drawdown Rules: Daily Loss and Maximum Loss

If there's one set of FTMO rules that ends the most challenges, it's the drawdown limits. These aren't suggestions. Breach either one, even by a dollar, and your account is closed immediately.

Maximum Daily Loss (MDL)

For the 2-Step challenge, your equity (including open positions, commissions, and swaps) cannot fall more than 5% of your initial balance in a single day. On a $100,000 account, that's a fixed $5,000 cap, every day, no matter what your current balance is.

The breach level shifts, though, because it's measured from your midnight balance. If your balance at midnight is $103,000, your breach level for the next day is $103,000 minus $5,000, or $98,000. If your balance drops to $97,000 the following night, the next day's breach level becomes $97,000 minus $5,000, or $92,000. The loss allowance stays the same. The starting point moves.

For the 1-Step challenge, the same structure applies but with a tighter 3% of initial balance. On a $100,000 account, that's $3,000 of daily room instead of $5,000. Significantly less margin for error.

Maximum Loss (ML)

In the 2-Step challenge, your total account loss cannot exceed 10% of the initial balance. This is a static number. On a $100,000 account, your equity can never drop below $90,000 at any point.

The 1-Step challenge also uses a 10% maximum loss, but with one major difference: it trails on an end-of-day basis. The trailing limit is recalculated at midnight based on the highest closing balance from any preceding trading day. So if your account closed at $106,000 on Day 3 and then dipped to $102,000 by the end of Day 4, the limit still uses the $106,000 high, putting your floor at $96,000. Once the limit moves up, it never comes back down. It only updates at the daily close (23:59:59 CET), not intraday, which gives you some breathing room during trading hours.

A Practical MDL Example

Say you're on a $100,000 2-Step account and you've had a rough morning. You're down $3,200 from open positions. You still have $1,800 of daily drawdown left before you hit the 5% limit. Should you take another trade?

Do the math first. If your next setup has a stop loss of $1,500, you're only $300 away from your limit if both the open positions and the new trade go against you simultaneously. Most experienced traders would stop for the day at that point.

Tools like Tanto can help here by auto-syncing your trades from your broker, so you always have real-time visibility into your P&L and how close you are to hitting a limit.

FTMO Challenge Rules: Profit Targets and Trading Days

Profit Targets by Phase

The targets are straightforward:

• 2-Step Challenge (Phase 1): 10% of initial balance

• 2-Step Verification (Phase 2): 5% of initial balance

• 1-Step Challenge: 10% of initial balance

• Funded Account: No profit target

On a $100,000 2-Step account, that means you need $10,000 in net closed profit for Phase 1 and $5,000 for Phase 2. Once funded, there's no profit target. All positions must be closed before your profit target can be reviewed.

Minimum Trading Days

Both the Challenge and Verification phases require at least 4 trading days. A "trading day" means you opened at least one position that day. The days don't need to be consecutive, but you can't pass the challenge in 3 days even if you've already hit the target. One detail that trips people up: if a trade spans multiple days, only the day you initiated it counts as a trading day. Holding a position into the next day doesn't give you credit for two days. Once you're on a funded account, there's no minimum trading days requirement.

For the 1-Step challenge, the minimum number of trading days isn't explicitly stated as 4. Instead, it's determined by the Best Day Rule, which practically requires multiple profitable trading days (more on that next).

The Best Day Rule (1-Step)

This is the FTMO challenge rule that catches the most 1-Step traders off guard. Your single most profitable day cannot account for more than 50% of your total Positive Days' Profit. That total is the sum of closed profits from your green days only, not including open positions. In practical terms, you need at least two or three solid green days to pass. This rule applies during the 1-Step challenge and carries over to the 1-Step funded account.

Here's an example. Say you make $7,000 on Day 3 and $4,000 on Day 7. Your total positive-day profit is $11,000. Day 3 represents about 64% of that total, which exceeds the 50% limit. You'd need to keep trading and generate more green days until Day 3 drops below the 50% threshold. You could do that by making another $3,000 or more in profit across other days, bringing the total to $14,000 or higher.

The good news: exceeding the Best Day limit isn't an instant breach. You just need to keep trading until the ratio normalizes.

News Trading, Overnight Holds, and Weekend Rules

FTMO rules around news, overnight positions, and weekends change depending on which phase you're in and what account type you have. This trips up more traders than you'd expect.

News Trading

During both evaluation paths, news trading is unrestricted. In the 2-Step Challenge and Verification phases, and in the 1-Step Challenge phase, you can trade around any high-impact release without limitation.

Once you're on a funded FTMO Account (Standard type), a 2-minute buffer applies. You cannot open or close positions on affected instruments within 2 minutes before or after major news releases. Instruments not directly tied to the news event can still be traded normally during that window.

Overnight and Weekend Positions

During both evaluation paths, you can hold positions overnight and over the weekend without restriction. This applies to the 1-Step challenge phase and to both phases of the 2-Step (Challenge and Verification).

Once you're on a funded FTMO Account with a Standard account type, you must close all positions before the weekend market close and before any rollover period that exceeds 2 hours. This applies regardless of whether you qualified through the 1-Step or 2-Step path.

The Swing Account Exception

If you select the Swing account type (available for the 2-Step challenge), you're exempt from both the news trading restrictions and the weekend closing requirement on funded accounts. This is the right choice if your strategy involves holding positions for several days or if you frequently trade around news.

The 1-Step challenge does not currently offer a Swing variation.

FTMO Profit Split and Scaling

Passing the challenge is only half the story. Here's what the funded account actually looks like.

Profit Split

The split depends on which path you took. If you qualified through the 1-Step challenge, you keep 90% of simulated profits from your very first reward. If you came through the 2-Step, you start at 80% and can increase to 90% by meeting the Scaling Plan conditions.

For the 2-Step, your challenge fee is refunded with your first reward withdrawal. The 1-Step fee is not refunded. Both are one-time costs with no recurring charges.

Scaling Plan

FTMO allows you to grow your account over time. Traders who meet the Scaling Plan requirements receive a 25% increase in their account balance and the improved 90% profit split. Accounts can be scaled up to a maximum initial balance of $2,000,000.

Payouts

Rewards can be requested after a minimum of 14 days from your first day of trading on the funded account. There's no minimum profit target required to receive a reward, though bank transfers require at least $20 in closed profit and crypto withdrawals require $50 to cover transaction fees.

Common Mistakes That Break FTMO Rules

Knowing the rules is one thing. Following them under pressure is another. Here are the patterns that cause the most failures:

Ignoring the daily loss limit after a losing streak. Two bad trades in the morning can eat up most of your daily allowance. Taking a third "revenge" trade when you only have $800 of headroom left is how most breaches happen. Many traders set a personal cutoff well below the daily limit to leave a buffer for open positions.

Forgetting about swaps and commissions. Your drawdown calculation includes everything: open P&L, commissions, and swap fees. Holding a large position overnight with a negative swap can push you closer to a limit than your trade P&L alone suggests.

Treating the challenge like a sprint. With no time limit on either path, there's no reason to force 10% in a short window. Taking a steady approach gives you more room to stay within the drawdown limits.

Missing the weekend close on funded accounts. This is a Standard account rule that doesn't apply during the evaluation. Traders who get comfortable holding over weekends during the challenge sometimes forget to close everything once funded.

Bottom Line

FTMO rules are strict, but they're not complicated once you understand how each one works. The daily loss limit, the maximum drawdown, the minimum trading days, and the newer Best Day Rule each exist to test one thing: whether you can trade with discipline over time. Study the specific numbers for your account size and challenge type before you start. And once you're trading, track your P&L against those limits every single day. The traders who pass aren't always the most profitable. They're the ones who never break a rule. Always check FTMO's official help docs for the most up-to-date rules before starting a challenge.

Last updated: March 6, 2026