FTMO Challenge: how it works & tips for passing

Out of all the challenges for funded trading accounts, the FTMO challenge is probably the most well-known one. Depending on the type of challenge you buy, passing it can open the door to trading with a $200,000 real live account, and keeping up to 90% of the profit. Here’s how it works, plus some ideas for passing it.

The FTMO challenge explained

FTMO is a Czech company that was founded in Prague in 2014. Its aim is to bring traders together by giving them better discipline, better feedback, and more capital.

The challenge consists of two phases. The first phase is called the FTMO Challenge, and the second phase is called FTMO Verification. The second phase lasts twice as long as the first. Its purpose is for you to show the company that you didn’t pass the first phase just by getting lucky.

How much does it cost?

Before you reach for your wallet, it’s well worth knowing that FTMO offers a free 14 day trial account. This allows you to test your risk management, skills, and strategies and measure them against the FTMO rules without spending a penny. You don’t even need to give the company any payment details, like your credit card info.

As for the cost of the challenge, this really depends on the size of the funded account you’d like to get. The challenge for the smallest funded account, $10,000 USD, costs €155, which is just over $166 at the time of writing. The fee for the largest account, $200,000 USD, is €1080, which at the time of writing, is just over $1,157.

How it works

The only actual difference between the different account size challenges is the different amounts of money. Apart from this, the goals and limits for all of the accounts are basically the same in terms of percentages.

Here are the rules for the first phase, the FTMO challenge:

  • You have 30 days to increase the starting account balance by 10%.
  • You must trade for a minimum of 10 days. These days do not need to be consecutive.
  • You must not lose more than 5% of the starting balance in a single day.
  • You must not lose more than 10% of the starting balance throughout the challenge.

The rules for FTMO verification, the second phase, are essentially the same, except that you have 60 days to increase the starting account balance by 5%. So basically, you get double the amount of time to make half the profit. Plus, you don’t need to pay anything for FTMO verification: it’s free as long as you pass the first phase.

Apart from the $200,000 USD account challenge, all of the other challenges are available in an “aggressive” style. In “aggressive”, the profit targets, and daily and overall loss limits are double.

You should also know that even if you don’t meet the profit target after 30 days, you’ll get an FTMO free retake so long as your account is in profit at the end of the time period. We think it’s really important to keep this piece of info in mind because hopefully, it takes off some of the pressure to meet that profit target. Less pressure means less stress, and hopefully less chance of emotional trading and taking on too much risk.

Other restrictions and FTMO Rules

The FTMO rules are really quite relaxed in comparison to a lot of prop firms. Things like discretionary trading, hedging, algorithmic (algo) trading, and Expert Advisors (EAs) are allowed.

However, if you’re using a third-party EA, you should bear in mind that other traders could be using exactly the same EA, and by extension, they could be placing exactly the same trades as you. This could result in exceeding the maximum capital allocation rule, which could cause you to fail the challenge or forfeit your funded account.

Profits & the FTMO scaling plan

Once you’ve passed the challenge, congratulations. You get to keep 80% of everything you make. But it doesn’t just end there. If you are consistently profitable, FTMO will increase your account balance by 25% every four months and let you keep 90% of everything you make. It is theoretically possible that you can be trading with up to $2,000,000 USD.

Tips for passing the FTMO challenge

When it comes to tips on passing the FTMO challenge, we really like this video from Kieran at Trader Seed. Kieran is himself funded by FTMO, and he has the videos of his withdrawals to prove it.

If you’re not able to watch the video, here are some of the key points from it:

  • The first point, which we’ve already touched on, is not to worry if you don’t hit the profit target for the month. Sometimes the market conditions for hitting it simply aren’t there, so don’t stress about not meeting it. Your main priority is to finish the month in profit, so you can take advantage of that free retake if the market didn’t help you hit the target.
  • With this in mind, start off with smaller trades in order to gradually bring the account in profit. Early wins will take away the initial stress of starting the challenge, and with a bit of profit as wiggle room, a couple of losses will have less of a psychological impact than bringing the account into the red into the early stages of the challenge.
  • Try to think in terms of current affairs and longer time periods. A key world event, such as something affecting the price of oil or gold, could be all you need to hit the profit target in just one or two trades.