FTMO Rules Explained Simply for Beginners: The Ultimate 2026 Guide

The FTMO Challenge is widely considered the gold standard in the proprietary (prop) trading space. For beginners, however, looking at the rules on the trading dashboard can feel like trying to read a complex institutional contract.

The reality of prop trading is strict: if you violate just one rule—even by a single dollar—you lose the account instantly.

This guide breaks down the official FTMO rules into plain, simple English so you can protect your capital, navigate the evaluation phases smoothly, and secure your funded account.

The FTMO Evaluation: A Quick Overview

To access a funded account of up to $200,000, you must first pass a Two-Phase Evaluation Process. Think of it as a two-part practical interview where you prove to the firm that you can manage risk effectively before they hand you their capital.

The 2-Step Evaluation Breakdown

Phase	Purpose	Duration	Profit Target
Phase 1: The Challenge	Prove your strategy has a market edge.	Unlimited (No time limit)	10%
Phase 2: Verification	Prove Phase 1 wasn’t a fluke.	Unlimited (No time limit)	5%
Phase 3: FTMO Trader	Trade live capital and withdraw profits.	Ongoing	None! Just trade safely.

💡 The Best Part? There is no maximum time limit to pass the evaluation. If you hit your profit target safely in two days, you pass. If it takes you four months of patient trading, that is completely fine too. The pressure to rush trades is entirely gone.

The 4 Golden Rules You Must Follow

FTMO judges you on your risk management, not just how much money you make. To clear the challenge, you must satisfy these four core objectives simultaneously.

1. The Minimum Trading Days (4 Days)

To complete both Phase 1 and Phase 2, you must trade for at least 4 active trading days.

• An active trading day means you opened at least one trade on that calendar day.
• Even if you hit your entire 10% profit target on Day 1, you cannot move to the next phase until you have opened and closed a micro-lot trade on 3 more separate days to satisfy this minimum.

2. Maximum Daily Loss (5%)

This is the rule that trips up most beginner traders. Your account equity or balance cannot drop by 5% of your starting balance for that specific day. The daily limit resets precisely at 00:00 CE(S)T (Central European Summer Time) every night.

• How it works: If you start the day at midnight with a balance of $100,000, your account value cannot drop below $95,000 at any point during the next 24 hours.
• The Floating Loss Trap: This rule includes open (floating) losses. If you have an active position that dips into a -$5,001 loss, you have failed the challenge instantly, even if the market reverses and hits your take-profit a minute later.

3. Maximum Overall Loss (10%)

This is your absolute safety net, also known as the “Maximum Drawdown.” Your account equity can never drop below 10% of your initial starting balance.

• For a $100,000 account, your account value can never cross below $90,000.
• Unlike the daily loss limit, this rule never resets. It remains a fixed floor based on your initial starting capital throughout the entire evaluation phase.

4. Profit Targets (10% and 5%)

To successfully clear the evaluation steps, you must hit your targets without breaking the drawdown rules explained above.

• Phase 1 Target: 10% (e.g., make $10,000 on a $100,000 account).
• Phase 2 Target: 5% (e.g., make $5,000 on a $100,000 account).

Account Risk Setups: Normal vs. Aggressive

When signing up for your evaluation, you will choose between two distinct risk frameworks:

• Normal: The standard setup explained above (5% daily limit, 10% overall limit, 1:100 leverage on forex).
• Aggressive: Designed for experienced, high-risk traders. It doubles your drawdown allowances (10% daily limit, 20% overall limit) but also doubles the profit targets (20% for Phase 1). Note: Maximum leverage on Aggressive accounts is reduced to 1:30 for Forex.

Important Hidden Rules for Live “FTMO Traders”

Once you pass Phase 2, you become an official funded FTMO Trader. Your initial registration fee is fully refunded with your very first profit split, and you keep 80% to 90% of the profits you generate.

However, live funded accounts introduce two critical restrictions that do not apply during the evaluation phases. If you choose the Standard account type, you must watch out for:

The Weekend Holding Rule

On a standard live account, you cannot hold open positions over the weekend. You must close all active trades shortly before the market closes on Friday night (or if a market rollover break lasts longer than 2 hours).

The News Trading Rule

You are prohibited from executing any new trades or closing existing ones within 2 minutes before and 2 minutes after a high-impact macroeconomic news release (such as NFP, FOMC, or interest rate decisions).

🎯 Pro Tip: If your strategy relies on trading the news or holding swing trades over the weekend, simply select the FTMO Swing account type when you register. It limits your maximum forex leverage to 1:30, but completely removes the news trading and weekend holding restrictions.

Summary Checklist for Passing FTMO

To keep it as simple as possible, passing the FTMO evaluation requires you to execute three things perfectly:

1. Protect the Day: Never let your daily floating or closed losses reach 5%.
2. Protect the Account: Never let your total account value drop below 10% of your starting capital.
3. Be Patient: Eliminate greed, use strict stop-losses, and leverage high-probability setups to hit your 10% and 5% goals without rushing.

Treat your evaluation account with the exact same discipline, risk management, and professional execution you would use to manage a live institutional fund.

Master Your Funding Strategy

Want to fast-track your path to a funded account? Pair your evaluation with rules-based execution frameworks designed to keep you well within your daily drawdown limits.