FTMO Drawdown Rules Explained: The Difference Between Trailing and Static (And Why It Matters)

FTMO uses two different drawdown types. The 1-Step has a 10% trailing max drawdown that rises as your balance grows. The 2-Step has a 10% static max drawdown that stays fixed at your starting balance minus 10%. The difference is why some traders fail the 1-Step after being profitable. Understand which one you are trading under before you open a single position.

What Is Maximum Drawdown?

Maximum drawdown is the largest peak-to-trough drop your account can sustain before the challenge is failed. It is a hard floor. Touch it, and the account is closed immediately. No grace period, no warning, no second chance.

On FTMO, the max drawdown is 10% on both the 1-Step and the 2-Step. The percentage is the same. The calculation is different, and that difference is where traders get caught.

Think of it this way: the max drawdown is the "you are done" line. The question is where that line is drawn, and whether it moves.

On a static drawdown, the line is drawn once, at the start, and it never moves. On a trailing drawdown, the line moves up every time your balance makes a new high. The more you grow, the closer the line gets to your current balance.

This is not a subtle difference. It is the difference between having $10K of room and having $3K of room on the same account, at the same balance, depending on which drawdown type applies.

FTMO 1-Step: The 10% Trailing Drawdown

On the FTMO 1-Step, the max drawdown is 10% trailing. Here is how it works in plain English:

Your drawdown floor starts at your initial balance minus 10%. On a $100K account, the floor starts at $90K. So far, same as the 2-Step.

The difference: every time your balance reaches a new high, the floor moves up to match. The floor is always "highest balance ever reached minus 10% of starting balance."

Example on a $100K 1-Step:

• Day 1: Balance $100K. Floor = $100K - $10K = $90K. Room = $10K.
• Day 3: Balance $105K (new high). Floor = $105K - $10K = $95K. Room = $10K from current balance, but floor has moved up $5K.
• Day 5: Balance $108K (new high). Floor = $108K - $10K = $98K. Room = $10K from current balance, but floor has moved up $8K from start.
• Day 7: Balance drops to $105K. Floor stays at $98K (it only moves up, never down). Room = $105K - $98K = $7K.
• Day 8: Balance drops to $101K. Floor stays at $98K. Room = $101K - $98K = $3K.

Notice what happened. You grew the account to $108K, a strong performance. But now a $7K pullback leaves you with only $3K of room. Another $3K loss and the account is closed, even though you are still up $1K from where you started.

This is why traders say "I was profitable and still failed." You were profitable relative to the starting balance, but the trailing floor does not care about the starting balance. It cares about the highest balance you ever reached.

The trailing drawdown is calculated on the balance, not equity. That means unrealized profits do not push the floor up. Only closed profits count. But the floor applies to your equity, not just your balance. So if you have a floating loss that pushes your equity below the floor, the account breaches even if the balance has not changed.

FTMO 2-Step: The 10% Static Drawdown

On the FTMO 2-Step, the max drawdown is 10% static. Here is how it works:

Your drawdown floor is fixed at your initial balance minus 10%. It never moves. No matter how high your balance grows, the floor stays at the same level.

Example on a $100K 2-Step:

• Day 1: Balance $100K. Floor = $90K. Room = $10K.
• Day 3: Balance $105K. Floor stays at $90K. Room = $15K (more room than you started with).
• Day 5: Balance $108K. Floor stays at $90K. Room = $18K.
• Day 7: Balance drops to $105K. Floor stays at $90K. Room = $15K.
• Day 8: Balance drops to $101K. Floor stays at $90K. Room = $11K.

The static drawdown gives you more room the more you grow. A $7K pullback from the $108K peak leaves you with $11K of room, not $3K. The floor has not moved, so all your profits above $90K are your cushion.

This is why the 2-Step is more forgiving for swing traders and anyone whose equity curve goes "two steps forward, one step back." The drawdown room expands as you profit, rather than shrinking relative to your peak.

Trailing vs Static: Side-by-Side

Here is the same $100K account under both drawdown types, tracking the floor and remaining room as the balance grows and pulls back.

Look at the $101,000 row. On the 1-Step, you have $3,000 of room left. One bad trade can end the challenge. On the 2-Step, you still have $11,000 of room. That is nearly 4x more breathing space at the same balance.

And at $99,000, you are $1,000 from death on the 1-Step but still have $9,000 of room on the 2-Step. Same trader, same performance, completely different outcome based on which drawdown type applies.

The Trailing Drawdown Trap

Here is the scenario that catches traders on the 1-Step.

You start a $100K 1-Step challenge. You trade well for the first week. By day 5, your balance is $108,000. You are 80% of the way to the 10% profit target ($110,000). You feel confident.

What you might not realize: your floor is now $98,000. Not $90,000. The trailing drawdown has moved up $8,000.

Day 6: the market goes against you. You lose $3,000. Balance drops to $105,000. Floor stays at $98,000. You have $7,000 of room left.

Day 7: another rough day. You lose $4,000. Balance drops to $101,000. Floor stays at $98,000. You have $3,000 of room left.

Day 8: you take what should be a normal trade. It loses $2,500. Balance drops to $98,500. You now have $500 of room. One more small loss and the account is closed.

At this point, your balance is $98,500. You are still down only $1,500 from where you started. On the 2-Step, you would have $8,500 of room left. On the 1-Step, you have $500. The trailing drawdown has compressed your room from $10,000 to $500 because you grew the account and then gave some back.

How the Daily Loss Interacts With Drawdown

The daily loss limit and the max drawdown are separate rules, but they compound risk. Understanding how they interact is critical for position sizing.

On the 1-Step, the daily loss is 3% and the max drawdown is 10% trailing. That means you can lose 3% per day for about 3.3 consecutive days before the max drawdown catches you. But because the drawdown trails, those 3% losses compound faster.

Example on $100K 1-Step:

• Day 1: Balance $100K. Daily loss limit = $3K. Max DD floor = $90K.
• You lose $3K on Day 1. Balance = $97K. Floor still $90K. Room = $7K.
• Day 2: Balance $97K. Daily loss limit = $2,910 (3% of current balance). Max DD floor still $90K.
• You lose $2,910 on Day 2. Balance = $94,090. Floor still $90K. Room = $4,090.
• Day 3: Balance $94,090. Daily loss limit = $2,823. Max DD floor still $90K.
• You lose $2,823 on Day 3. Balance = $91,267. Floor still $90K. Room = $1,267.

Three consecutive daily loss limit hits, and you have $1,267 of room left. One more bad day at even half the daily limit and the max drawdown breaches. The daily loss did not kill the account on any single day. The accumulation did.

On the 2-Step, the same pattern gives you more room because the daily loss is 5% and the drawdown is static:

• Day 1: $100K, lose $5K. Balance = $95K. Floor $90K. Room = $5K.
• Day 2: $95K, lose $4,750. Balance = $90,250. Floor $90K. Room = $250.

Even on the 2-Step, two consecutive max daily losses leave you with almost no room. The lesson: consecutive daily loss limit hits are a death sentence on any account type. If you have two max daily loss days in a row, stop trading and reassess.

Dollar Examples: $10K, $25K, $50K, $100K, $200K

Here is the exact dollar math for every FTMO account size, showing the daily loss limit, max drawdown floor (both types), and the daily loss as a percentage of max drawdown room.

$10,000 Account

The $10K account is the tightest. On the 1-Step, $300 of daily room means a single 30-pip move on a mini lot can eat half your daily limit. This account is only viable for very small position sizes.

$25,000 Account

$50,000 Account

$100,000 Account

$200,000 Account

The pattern is the same at every size: the trailing drawdown on the 1-Step catches you after 3 consecutive daily limit hits, and the static drawdown on the 2-Step catches you after 2 consecutive max daily losses. But the 2-Step gives you more daily room (5% vs 3%), so each "hit" absorbs more variance before it happens.

Which Drawdown Type Fits Your Strategy

The drawdown type should match your equity curve shape, not your strategy name.

If you are a scalper who compounds 1-2% per day with small drawdowns, the 1-Step's trailing drawdown will work for you. The floor rises, but your equity curve is smooth enough that you rarely pull back close to it.

If you are a swing trader who catches one or two big moves per challenge, the 1-Step's trailing drawdown is dangerous. One big winning day pushes the floor up, and the subsequent flat or losing period compresses your room. The 2-Step's static drawdown gives you the room to ride the natural variance of a swing trading approach.

If you are unsure, start with the 2-Step. The static drawdown is more forgiving for every equity curve shape except perfectly steady compounding, and even then it still works fine.