FTMO's rules are stricter than most traders expect. The daily loss limit kills roughly 60% of failed challenges. The trailing drawdown on the 1-Step catches traders who assume it works like the 2-Step's static version. The Best Day Rule can fail your challenge even when the profit target is met.
Here is every rule in the FTMO Challenge, with dollar math for every account size, ranked by which rules actually cause failures, so you know which ones to plan around before you pay the entry fee.
This guide covers both the 1-Step and 2-Step Challenge rules, including the Swing variant, current as of June 2026. If you want the full firm review instead, read our FTMO Review.
Key Takeaways
- The daily loss limit is the #1 challenge killer at roughly 60% of all failures. On the 1-Step it is 3% ($300 on $10K, $3,000 on $100K). On the 2-Step it is 5% ($500 on $10K, $5,000 on $100K).
- The 1-Step uses a 10% trailing max drawdown. The 2-Step uses a 10% static max drawdown. Trailing is harder because your floor rises as your balance grows.
- The Best Day Rule on the 1-Step means your single best day cannot exceed 50% of total positive days' profit. You can hit the 10% target and still fail the challenge.
- The daily loss resets at midnight CET (6 PM EST). US-based traders regularly breach this boundary thinking a new day has started when it has not.
- There is no time limit on either challenge as of 2026. The only deadlines are the ones you set for yourself.
On This Page
- The Rules That Matter Most (Ranked by Failure Rate)
- Daily Loss Limit: The #1 Challenge Killer
- Maximum Drawdown: Static vs Trailing
- Profit Targets: Phase 1 vs Phase 2
- Best Day Rule (1-Step Only)
- News Trading Rules
- Weekend Holding Rules
- Prohibited Strategies
- Time Limits
- Minimum Trading Days
- The Timezone Reset Trap
- FAQs
The Rules That Matter Most (Ranked by Failure Rate)
Not all rules are equal. Some will end your challenge on day two. Others are theoretical risks you will probably never trigger. Here is every FTMO Challenge rule, ranked by how often traders actually fail on them.
| Rank | Rule | Estimated Failure Share | Why It Kills Challenges |
|---|---|---|---|
| 1 | Daily Loss Limit | ~60% | One bad session ends the challenge. No recovery window. |
| 2 | Max Drawdown (trailing or static) | ~20% | Trailing on 1-Step is especially punishing after a good run. |
| 3 | Best Day Rule (1-Step only) | ~10% | Catches profitable traders who hit one big move and grind. |
| 4 | News / Weekend violations | ~5% | Standard accounts only. Traders forget the 2-minute window. |
| 5 | Prohibited strategies | ~3% | Arbitrage, tick scalping, latency exploitation. |
| 6 | Profit target not met | ~2% | Most traders who survive the loss rules hit the target eventually. |
The daily loss limit is not just the most common failure. It is the failure that feels the most unfair, because most traders who breach it were profitable the day before. One session, one bad sequence, and the challenge is over.
If you only memorize one number from this guide, memorize your daily loss limit in dollars. Everything else follows from that.
Reading about rules helps. Trading inside them for 14 days on the free trial is what actually makes them stick. The dashboard shows your daily loss and drawdown counters ticking in real time — no credit card needed.
Daily Loss Limit: The #1 Challenge Killer
The daily loss limit is the single most important rule in the FTMO Challenge. It kills more challenges than every other rule combined.
On the 1-Step Challenge, the daily loss limit is 3% of the initial account balance. On the 2-Step Challenge (both Standard and Swing), the daily loss limit is 5% of the initial account balance.
The limit applies to equity, not just balance. That means floating losses count. If you have a $100K account and you are in a trade that is down $3,000 on the 1-Step, you have already breached, even if the trade has not been closed yet.
This is the trap that catches traders who think the daily loss only applies to realized losses. It does not. Account MetriX tracks the equity drawdown in real time, and FTMO calculates the daily loss based on the equity curve, not the closed P&L.
| Account Size | 1-Step Daily Loss (3%) | 2-Step Daily Loss (5%) |
|---|---|---|
| $10,000 | $300 | $500 |
| $25,000 | $750 | $1,250 |
| $50,000 | $1,500 | $2,500 |
| $100,000 | $3,000 | $5,000 |
| $200,000 | $6,000 | $10,000 |
On the 1-Step, $3,000 of daily room on a $100K account sounds generous until you are in three simultaneous positions during a London open spike and your equity drops $3,200 in 90 seconds. That is not a hypothetical. That is Tuesday for a lot of traders.
The 2-Step gives you $5,000 of room on the same account size, which is meaningfully more forgiving for strategies with wider stop losses or for traders who run multiple positions at once.
How the daily loss is calculated
The daily loss is calculated as the difference between the highest equity of the day and the lowest equity of the day. Not balance. Equity.
If your equity peaks at $103,000 at 10 AM and drops to $100,500 by 2 PM, your daily loss is $2,500, not $500. The peak matters, not the starting balance.
This catches traders who are up $2,000 in the morning, give it all back, and then lose another $1,500. They think they are down $1,500 on the day. FTMO calculates the drop from the $102,000 peak, and the daily loss is actually $2,500, because the drawdown is measured from the intraday high, not the starting balance.
When the daily loss resets
The daily loss limit resets at midnight Central European Time (CET). That is 6:00 PM Eastern Standard Time for US-based traders.
This is not midnight your local time. This is not the New York session close. The reset fires at a fixed time, and if you are in a trade at 5:55 PM EST thinking you are about to get a fresh daily limit, you are wrong. The reset is still 5 minutes away.
The daily loss resets at midnight CET, which is 6:00 PM EST. This is one hour after the New York close, not at midnight your local time.
If you open a trade at 5:50 PM EST and it moves against you by 5 PM, you might assume the next session starts a fresh daily limit. It does not. You are still in the same FTMO trading day until midnight CET.
Multiple Trustpilot reviews from 2025-2026 describe traders breaching the daily loss because they traded into the close thinking the next session would reset the counter. It does not.
Maximum Drawdown: Static vs Trailing
The max drawdown is the second most important rule in the FTMO Challenge, and the difference between static and trailing is where most 1-Step traders get caught.
The 2-Step Challenge uses a static 10% max drawdown. The floor is fixed at 90% of your starting balance and never moves. If you start with $100K, the floor is $90K. You can grow the account to $150K and your floor stays at $90K. That gives you $60K of room from your peak.
The 1-Step Challenge uses a trailing 10% max drawdown. The floor rises as your balance grows. If you start at $100K and grow to $108K, the floor moves to $97,200 (10% below $108K). If you then pull back to $97,000, the challenge fails, even though you are still well above the original $90K floor.
| Account Size | 1-Step Trailing DD (10%) | 2-Step Static DD (10%) | Key Difference |
|---|---|---|---|
| $10,000 | Starts at $9,000, trails up | Fixed at $9,000 | Trailing rises with profits |
| $25,000 | Starts at $22,500, trails up | Fixed at $22,500 | Trailing rises with profits |
| $50,000 | Starts at $45,000, trails up | Fixed at $45,000 | Trailing rises with profits |
| $100,000 | Starts at $90,000, trails up | Fixed at $90,000 | Trailing rises with profits |
| $200,000 | Starts at $180,000, trails up | Fixed at $180,000 | Trailing rises with profits |
Why trailing is harder
The trailing drawdown punishes profitable traders who give back gains. Here is the scenario that catches people.
You start a $100K 1-Step Challenge. By day 5, you are up to $106,000. The trailing floor has moved to $95,400 ($106K minus 10%). On day 6, the market reverses hard and you drop to $95,000. Challenge failed.
If you were on the 2-Step, the floor would still be at $90,000, and you would have another $5,000 of room. The trailing drawdown on the 1-Step just cost you the challenge on a pullback that the 2-Step would have survived.
This is why I tell swing traders to use the 2-Step. The static drawdown matches the wider swings in your equity curve. The trailing drawdown is built for consistent daily compounders who rarely have large pullbacks.
If you are on the 1-Step, open Account MetriX every morning and check the current trailing floor. The floor moves every time your balance makes a new high. Do not assume the floor is where it was yesterday.
A simple rule: if your balance has grown more than 3% from the starting balance, your trailing floor is already higher than the static floor on the 2-Step. Plan accordingly.
Reading about drawdown limits is one thing. Watching the counter tick in real time on your own FTMO account is what makes it stick. The 14-day free trial gives you the full dashboard, live drawdown tracking, and zero financial risk.
Profit Targets: Phase 1 vs Phase 2
The profit target is the number most traders focus on first. It should be the last thing you worry about. If you survive the daily loss limit and the max drawdown, the profit target takes care of itself.
1-Step Challenge
The 1-Step has a single phase with a 10% profit target. On a $100K account, you need to reach $110,000 in balance (or equity, if FTMO counts unrealized gains at the time of evaluation). There is no Phase 2. Hit the target once and you are funded.
2-Step Challenge
The 2-Step has two phases. Phase 1 requires a 10% profit target. Phase 2 requires a 5% profit target.
On a $100K account, Phase 1 requires you to grow the account to $110,000. Phase 2 then requires you to grow from the starting balance to $105,000. The daily loss and max drawdown rules apply in both phases.
The Phase 2 target is deliberately lower. It is a consistency check, not a difficulty gate. If you can hit 10% without breaching the loss rules, you can almost certainly hit 5% on the same rules.
| Account Size | 1-Step Target (10%) | 2-Step Phase 1 (10%) | 2-Step Phase 2 (5%) |
|---|---|---|---|
| $10,000 | $1,000 | $1,000 | $500 |
| $25,000 | $2,500 | $2,500 | $1,250 |
| $50,000 | $5,000 | $5,000 | $2,500 |
| $100,000 | $10,000 | $10,000 | $5,000 |
| $200,000 | $20,000 | $20,000 | $10,000 |
There is no time limit on either phase as of 2026. You can take a week or a year. The clock does not matter. The rules do.
Best Day Rule (1-Step Only)
The Best Day Rule is the most underdiscussed rule in the FTMO ecosystem. It applies only to the 1-Step Challenge, and it catches profitable traders who do not even know it exists.
The rule: your single best trading day cannot exceed 50% of your total positive days' profit.
In plain English, if the sum of all your profitable days is $10,000, your single best day cannot be more than $5,000. If it is, the challenge fails, even if the profit target is met.
Scenarios where the Best Day Rule catches you
Scenario 1: The Big Catch. You are on a $100K 1-Step. You catch a 6% move on day 3 ($6,000). Over the next 7 trading days, you grind out 4 more positive days at 1% each ($4,000). Total positive: $10,000. Target met. Best day: $6,000 = 60% of total positive. Fails the Best Day Rule.
Scenario 2: The NFP Gap. You are on a $100K 1-Step. You hold through a non-farm payroll move (on a Swing account or outside the news window) and make $7,000 in one session. Over the next 10 days, you add $3,000 across smaller positive days. Total positive: $10,000. Target met. Best day: $7,000 = 70% of total positive. Fails the rule.
Scenario 3: The Compounder. You make 2% per day for 5 days. $2,000 + $2,040 + $2,081 + $2,122 + $2,165 = $10,408. Best day is $2,165 = 20.8% of total positive. Well under the 50% threshold. Passes cleanly.
You can hit the 10% profit target and still fail the challenge if your best day exceeds 50% of total positive days. The rule is independent of the target. FTMO enforces it strictly.
If you are a swing trader who catches one or two big moves per challenge, the 1-Step is the wrong product. Use the 2-Step instead, which has no Best Day Rule.
News Trading Rules
The news trading restriction is the rule that catches traders who scalp around economic events.
On the 1-Step and 2-Step Standard accounts, you cannot open or close trades within 2 minutes before and 2 minutes after a high-impact news event. The restriction applies to the specific instrument affected by the news, not to all instruments simultaneously.
High-impact news events include NFP (Non-Farm Payrolls), CPI (Consumer Price Index), FOMC rate decisions, and any event marked red on the Forex Factory calendar. FTMO uses their own internal calendar, so check the FTMO app, not a third-party source.
What counts as a news trade violation
If you open a EUR/USD position at 8:28 AM EST and NFP drops at 8:30 AM EST, you have violated the 2-minute window. Even if the trade was a technical entry that had nothing to do with the news release. FTMO does not evaluate intent. They evaluate timestamps.
If you have a position open from the previous day and you close it at 8:29 AM EST, one minute before NFP, that is also a violation. The rule applies to both opens and closes.
How to avoid news violations
Close all positions at least 3 minutes before any red-folder event. Set a phone alarm for 8:27 AM EST on NFP days. Check the FTMO news calendar every morning before your first trade.
2-Step Swing: No news restrictions
The 2-Step Swing account has no news trading restriction. You can trade through NFP, CPI, FOMC, or any other event without a time window. This is the primary reason swing traders and news traders pick the Swing variant. The pricing is identical to the 2-Step Standard.
Now that you understand the rules, the next move is choosing the right account size for your budget and strategy. FTMO's fee is fully refundable on first payout, so the real question is which size gives your strategy enough room to breathe.
Weekend Holding Rules
On the 1-Step and 2-Step Standard accounts, you cannot hold positions over the weekend. All positions must be closed before the Friday market close.
FTMO defines the weekend cutoff as the standard Friday close for each instrument. For forex, that is typically 5:00 PM EST on Friday. If you have an open position at 5:01 PM EST on Friday, you have violated the weekend holding rule.
The practical implication: if you are a swing trader who holds positions for 2-5 days, the Standard account forces you to close winners and losers before the weekend, even if your technical analysis says the trade has more room to run.
The 2-Step Swing account allows weekend holds. This is the second major advantage of the Swing variant (along with no news restrictions), and the reason most swing traders pick it over the Standard.
Prohibited Strategies
FTMO prohibits several trading strategies that exploit platform mechanics rather than market edge. These are not judgment calls. They are hard bans, and FTMO will close your account and deny payouts if they detect them.
Arbitrage
Trading the same instrument on two different accounts or platforms to exploit price differences. This includes latency arbitrage, where you trade on a slower price feed against a faster one.
Tick scalping
Opening and closing positions within seconds or ticks to exploit bid-ask spread discrepancies or feed delays. FTMO defines this as positions held for less than a few seconds with minimal price movement.
Latency exploitation
Trading on delayed or stuck prices during high-impact news events. If the price feed freezes for 5 seconds and you open a position on the stale price, that is latency exploitation.
Copy trading from other accounts
Copying trades from another FTMO account or from a third-party signal service that trades the same strategy across multiple accounts. FTMO allows copy trading between your own accounts, but trading identical strategies across multiple accounts from different users will trigger a review.
High-frequency grid and martingale strategies
FTMO does not explicitly ban all grid or martingale strategies, but the daily loss limit makes aggressive versions unviable. A martingale that doubles down on every loss will breach the 3% or 5% daily limit within 3-4 levels on most account sizes.
FTMO allows Expert Advisors (EAs). You can automate your trading strategy on MT4, MT5, or cTrader. The catch: you are responsible for every trade the EA takes, including trades that breach the daily loss limit or max drawdown.
If your EA opens a position that breaches the daily loss at 3 AM while you are asleep, the challenge still fails. Build hard stops into the EA itself, and do not rely on FTMO's server-side limits to catch it in time.
Time Limits
As of 2026, FTMO has no time limit on either the 1-Step or 2-Step Challenge. This is a change from earlier years, when FTMO imposed a maximum duration on challenge phases.
You can take as long as you need to hit the profit target. One week, one month, six months. The clock does not matter. The daily loss and max drawdown rules still apply every single day, so the risk does not disappear just because there is no deadline.
The practical implication: there is no reason to rush. If you need to sit out a volatile week, sit out. If your setup does not appear for 10 days, wait. The lack of a time limit removes the biggest psychological pressure that causes traders to force trades.
Use this to your advantage. The traders who pass are the ones who treat the challenge like a 2-month process, not a 2-week sprint.
Minimum Trading Days
FTMO currently requires a minimum number of trading days to pass the challenge. The exact minimum has changed over time, so check the current rules on the FTMO website before you start. As of 2026, the requirement is minimal enough that most active traders hit it naturally within the first week.
The minimum trading day requirement is not about forcing you to overtrade. It is about preventing traders from passing the challenge on a single lucky trade. If you hit the 10% target in one session, you still need to trade the minimum number of days before the challenge is marked as passed.
The workaround for this is straightforward: trade small on the remaining days. You do not need to be profitable on every minimum trading day. You just need to open and close at least one position.
The Timezone Reset Trap
This deserves its own section because it catches enough traders to be a real problem, not a theoretical edge case.
FTMO's daily loss limit resets at midnight Central European Time (CET). For traders in the United States, that is 6:00 PM Eastern Standard Time. For traders in the UK, it is 11:00 PM GMT. For traders in Australia, it is 9:00 AM AEST the next day.
The problem: most traders assume the daily loss resets at midnight their local time, or at the New York session close, or at the forex market open on Sunday. None of these are correct.
Real examples of the timezone trap
Example 1: The US trader. You are in New York. It is 5:30 PM EST. You are down $4,000 on the day on a 2-Step $100K account (daily limit is $5,000). You think, "I will just hold this trade until tomorrow when the daily loss resets." But the daily loss does not reset until 6:00 PM EST, not midnight EST. If the trade moves against you another $1,100 between 5:30 PM and 6:00 PM, you breach the daily loss. The "tomorrow" you were waiting for was still 30 minutes away.
Example 2: The London trader. You are in London. It is 10:30 PM GMT. You had a good morning session and you are up $3,000. You open a new trade that moves against you. By 11:00 PM GMT, you are down $5,500 on the day on a 1-Step $100K account. You assumed the daily loss reset at midnight GMT. It resets at midnight CET, which is 11:00 PM GMT. You breached at exactly the moment the reset fired.
Example 3: The weekend warrior. You close all positions before the Friday close at 5:00 PM EST. On Sunday at 6:00 PM EST (midnight CET), the new trading week starts and the daily loss resets. But if you open a trade at 5:05 PM EST on Sunday thinking it is a new FTMO day, you are wrong. The FTMO day started at 6:00 PM EST on Sunday, so your trade at 5:05 PM EST is still part of the previous day's daily loss calculation.
If you trade anywhere near the daily loss boundary, set a phone alarm for 5:45 PM EST (or 15 minutes before midnight CET in your timezone). Use it as a hard cutoff: close all positions or reduce exposure before the alarm fires.
Do not rely on "feeling" where you are in the FTMO day. The timezone math is simple but unforgiving, and FTMO does not make exceptions for timezone confusion.
If you have been caught by the timezone trap before, or if you want to understand how drawdown rules interact with the daily loss across different account sizes, read our FTMO drawdown rules explainer.
For the full firm overview including pricing, platform options, and payout details, see our FTMO Review. If you are trying to decide between the 1-Step and 2-Step, read our 1-Step challenge rules breakdown.
Check Current FTMO Challenge Prices Start the Free Trial First
