Regardless of the account size, both phases of an FTMO challenge – the challenge and the verification – have clearly defined rules or Trading Objectives. Breaking any one of them will cause you to fail your evaluation and forfeit the fee. In this article, we’ll go through all of the FTMO rules for prop tests and how you can avoid breaching them.
Important terms
Before we take an in-depth look at the objectives, it’s important to consider what “loss” actually means. This doesn’t just mean if a trade or trades close at a loss. It refers to your account equity being at a certain amount of loss. The trades themselves could eventually close in your favor and leave your account in profit. However, if at any point, the collective losses of these open trades breached the daily or maximum loss amounts, then you would still fail the evaluation. The correct term for this is drawdown. Drawdown is how much your account goes down after opening trades.
You should also bear in mind that swap and commission fees are also counted towards your account losses.
FTMO Trading days
Both stages of the evaluation have time restrictions and minimum requirements. If, for example, you must trade for a minimum of 10 days, then you must place at least one trade per day for ten days. These days do not have to be consecutive. Even if it’s the smallest possible lot size, the trade will still count towards this rule.
Bear in mind that if you open a trade on one day and close it on the next day, this will only count as one trading day. It is the opening of a trade that defines the day as a trading day, not the closing.
If you fulfill the trading objectives and meet the profit target earlier than the time limit on your evaluation, you don’t need to wait for it to come to an end. For example, the Verification stage lasts a maximum of 60 calendar days, but if you fulfill the trading objectives in 30 days, you won’t need to wait another 30 days before FTMO will start the process of giving you your funded account.
FTMO free trial rules
First of all, let’s take a look at the rules for the free trial. This allows you to get an impression of what it’s like to trade with FTMO before you shell out your hard-earned cash for an actual paid prop test.
- Starting from the day you place your first trade, you have 14 days to increase the original account balance by 5%.
- You may not lose more than 5% of the original account balance within a single day.
- You may not lose more than 10% of the original account balance during the length of the free trial.
- You must trade for a minimum of 5 days.
FTMO Challenge rules
Now let’s look at the rules for the first phase of the evaluation, the challenge:
- You have 30 days to increase the original account balance by 10%.
- You may not lose more than 5% of the original account balance within a single day.
- You may not lose more than 10% of the original account balance during the length of the challenge.
- You must trade for a minimum of 10 days.
FTMO Verification rules
You will probably be aware that an FTMO Evaluation consists of two phases – the challenge and the verification. The verification is for you to prove that passing the challenge wasn’t simply a fluke. The rules, however, are a little bit more relaxed in comparison to the challenge:
- There is no fee for the verification.
- If you pass the challenge, you don’t have to inform FTMO. They will be aware of this automatically.
- You’ll do your FTMO verification on a new account. You’ll get the login credentials for this 1-2 business days after passing the challenge.
- You have 60 days to increase the balance of the verification account by 5%.
- You may not lose more than 5% of the original account balance within a single day.
- You may not lose more than 10% of the original account balance during the length of the verification.
- You must trade for a minimum of 10 days.
FTMO Normal vs Aggressive
The Evaluation process is available in two different styles: aggressive and normal. Let’s take a look at aggressive mode:
- The evaluation fee is doubled.
- The largest account size you can have is the second-highest available account size for the normal mode. For example, you can have a $200,000 USD account on normal but not on aggressive. $100,000 is the limit.
- The duration of both phases of the evaluation – challenge and verification – are the same: 30 days and 60 days.
- During the challenge, you may not lose more than 10% of the starting account balance within a single day or 20% overall. These same loss limits also apply to the verification.
- In both challenge and verification phases, the profit target is double what it would be in normal mode. You need to make 20% of the starting account balance in the challenge phase, and 10% of it in the verification.
FTMO Swing account rules
Another important distinction is the use of a “swing” account. Unlike a standard FTMO account, a swing account permits you to hold trades overnight and over the weekend. It’s possible to hold a position over the weekend with a standard account, but you will need to contact FTMO and request this before midnight every Wednesday.
You should also bear in mind that the leverage is also slightly different between accounts. You’ll get 1:100 on a standard account, and 1:30 on a swing account.
FTMO retake – do I get a second chance or a free retake?
If you breach any of the rules, you will fail the change and forfeit your fee, and unfortunately, FTMO does not offer any discounts for additional attempts to pass the evaluation. However, there’s nothing stopping you from ordering another evaluation and trying again.
However – and this is a big however: if at the end of your challenge, you did not breach any of the rules and your account is in profit with all of your positions closed, you are entitled to a free retake.
Plus, as long as you haven’t exceeded the maximum daily losses and you have made more than 5% of your original account balance (or 10% on Aggressive Risk mode), you can get a free FTMO challenge extension of 14 days. This is really handy because the extra time should hopefully remove the need or temptation to generate the final necessary bit of profit by taking on too much risk, which could then cause you to fail the evaluation and cost you your fee
If you are offered an extension, you must activate it on the 28th or 29th day of your trading evaluation. You won’t be able to activate it on the last day of your evaluation (day 30).
Tips for not breaking the rules
It goes without saying that proper risk management and money management are absolutely critical. Check and double-check your position size so that drawdown will not inadvertently breach one of the loss limits. Remember not to forget about swap and commission fees. When placing new trades, do not forget to factor in possible losses from existing open positions.
See also our page on this topic, how the FTMO challenge works, which contains a video from an FTMO trader and his ideas on how to keep your Trading Objectives green and get funded.