Passing an FTMO challenge is not just about generating returns. It is about generating returns within a tightly defined risk envelope, where a single session of uncontrolled losses can undo weeks of disciplined work. The two rules governing that envelope — the daily loss limit and the maximum drawdown — are non-negotiable, apply in real time including to open positions, and do not allow partial breaches or appeals.
Most traders who fail on FTMO do not fail because their strategy is unprofitable. They fail because they did not understand exactly how the drawdown rules work at the mechanical level: what counts toward the calculation, when the clock resets, what reference point is used, and why floating losses on open trades are treated identically to closed losses. These are not edge cases. They are the rules.
This article explains every component of FTMO's drawdown framework precisely — the exact numbers for each account stage, the difference between the two limits, the critical distinction between static and trailing drawdown, the five scenarios most likely to trigger a violation, and a clear method for tracking your remaining room in real time throughout each session.
FTMO Drawdown Rules — The Exact Numbers (2026)
FTMO imposes two separate drawdown limits across all three stages of its evaluation process: the FTMO Challenge, the Verification, and the funded account. Both limits apply simultaneously and independently — complying with one does not give you any room to exceed the other.
| Stage | Daily Loss Limit | Maximum Drawdown | Resets |
|---|---|---|---|
| FTMO Challenge | 5% of initial balance | 10% of initial balance | Daily limit resets at midnight CET |
| Verification | 5% of initial balance | 10% of initial balance | Daily limit resets at midnight CET |
| FTMO Funded Account | 5% of initial balance | 10% of initial balance | Daily limit resets at midnight CET |
The percentages are consistent across all stages. What changes is the account size — and therefore the dollar value of each limit. Here are the exact dollar amounts for the three most common FTMO account sizes:
| Account Size | Daily Loss Limit (5%) | Max Drawdown (10%) | Drawdown Floor |
|---|---|---|---|
| $10,000 | $500 per day | $1,000 total | $9,000 minimum equity |
| $25,000 | $1,250 per day | $2,500 total | $22,500 minimum equity |
| $100,000 | $5,000 per day | $10,000 total | $90,000 minimum equity |
The "Drawdown Floor" column is the key number to memorise. For a $10,000 account, if your account equity — including any open positions — drops below $9,000 at any point during the challenge, the challenge is over. There is no partial breach. There is no warning system built into the challenge itself. The moment equity touches that floor, the account is flagged for violation.
FTMO calculates drawdown on equity, not balance. Equity includes the unrealised profit or loss of all currently open positions. If your account balance is $10,200 but you have an open position sitting at −$1,400, your equity is $8,800 — which is below the $9,000 drawdown floor on a $10,000 account. The challenge is breached while that position is open, even if you close it at breakeven the next minute.
Daily Loss Limit vs Max Drawdown — Why They're Different
These are two separate rules measured over different time horizons and from different reference points. Many traders treat them as variations of the same rule. They are not. Understanding the distinction precisely is what prevents the specific type of failure where a trader complies with one rule every single day and still fails the challenge by breaching the other.
The daily loss limit caps how much equity can fall within a single trading day. The reference point is your account equity at the start of that session — specifically, the equity value at midnight CET. If your account opened the day at $10,500 and the 5% daily limit is $500 (based on the $10,000 initial balance), your daily loss floor for that session is $10,000. You cannot let your equity fall below $10,000 that day. The following morning at midnight CET, the clock resets, and the daily reference point becomes whatever your equity is at that moment.
The maximum drawdown caps how far your equity can fall from the initial starting balance at any point across the entire duration of the challenge or funded account. This reference point does not reset. It does not change. For a $10,000 account, the absolute floor is always $9,000 — whether you are on day one, week three, or after growing the account to $11,000.
| Dimension | Daily Loss Limit | Maximum Drawdown |
|---|---|---|
| Time horizon | Single trading day (resets at midnight CET) | Entire challenge / funded account duration |
| Reference point | Equity at start of today's session | Initial starting balance (fixed, never changes) |
| Limit amount ($10K) | $500 per day maximum loss | $1,000 total maximum loss from start |
| What triggers it | Today's equity falls more than 5% below today's opening equity | Current equity falls more than 10% below initial balance at any moment |
| Includes open positions? | Yes — floating P&L counts in real time | Yes — floating P&L counts in real time |
| Can be breached without a losing day? | No — by definition it requires a net loss on the day | Yes — cumulative small losses over many days can reach 10% total |
The key practical insight from this table is the last row. You can lose $300 on Monday, $250 on Tuesday, $280 on Wednesday, and $220 on Thursday — each day within the daily loss limit — and arrive at Thursday evening having lost $1,050 in total, which breaches the maximum drawdown on a $10,000 account. Every individual day was compliant. The cumulative result was not.
This is why tracking both limits simultaneously and independently is the only correct approach. The FTMO Challenge Tracker maintains a running calculation of both figures in parallel — showing your remaining daily room and your remaining total room as separate live values — so you know your real position before placing any new trade.
How FTMO Calculates Drawdown (Static vs Trailing)
This is the section that causes the most confusion among experienced traders who have used other prop firms — and it is the section most worth reading carefully if you are transitioning from a firm that uses trailing drawdown.
FTMO uses static (fixed) maximum drawdown for the Challenge and Verification stages. Static means the reference point for the drawdown calculation is the original starting balance when the challenge began, and it never moves. It does not adjust upward as your account grows. It does not follow your peak balance. It sits where it started and does not move.
Here is what that means in concrete terms for a $10,000 Challenge account:
Contrast this with a trailing drawdown model, which some other prop firms use. Under trailing drawdown, the floor rises with your peak equity. If you grow a $10,000 account to $11,000, a trailing drawdown system moves the floor from $9,000 to $9,900 (10% below the new peak of $11,000). This penalises you for being profitable — your buffer shrinks relative to your peak, not relative to your starting point.
FTMO's static model is, from a mathematical perspective, more trader-friendly once you understand it. Growing your account to $11,000 gives you a $2,000 cushion before the floor — not a $1,000 cushion. Your gains give you real additional room in a static drawdown system. However, this advantage only materialises if you understand how the calculation works. Many traders assume FTMO uses trailing drawdown and miscalculate their actual remaining room as a result.
FTMO has periodically offered funded account variants with different drawdown structures. Always confirm which drawdown model applies to your specific account type in the FTMO platform before beginning any session. The mechanics described in this article apply to the standard Challenge and Verification. Do not assume the same model applies to all FTMO products. When in doubt, contact FTMO support directly to confirm the drawdown type for your account.
Track Your FTMO Drawdown
Live
The FTMO Challenge Tracker pre-calculates your remaining room under both limits simultaneously — daily loss and max drawdown — updated in real time including any open position floating P&L. Know your exact floors before you open the next trade, not after.
The 5 Scenarios That Cause Drawdown Violations
These are not hypothetical. Each one describes a pattern that appears repeatedly in failed FTMO challenges — not because the traders involved had unprofitable strategies, but because a specific error in risk management pushed their equity below a drawdown floor they thought they had more room from.
-
1Revenge Trading After a Loss
A trader takes a $300 loss. With $200 of daily room remaining on a $10,000 account, they enter a second position at double size to "recover" the loss before the session ends. The second trade moves against them by the same amount as their stop — but at double size, the loss is $300, not $150. Daily limit breached. The pattern is predictable: the impulse to recover a loss within the same session leads to larger positions taken in worse market conditions (emotional, reactive, rushed). The daily loss limit is most often breached in the second or third trade of a session that began with a loss, not the first.
-
2Holding Over a Weekend Gap
A trader leaves a position open into Friday's market close. The position is slightly profitable — $150 up — and they expect the trend to continue on Monday. Over the weekend, a geopolitical event shifts the relevant currency or asset sharply against them. Monday's open gaps $600 below their stop loss. Because gaps skip through stop orders, the trade executes at open, not at the stop level. The resulting loss is not $150 (the intended risk) but $750 — exceeding both the daily loss limit and potentially threatening the maximum drawdown depending on the account's accumulated losses. Weekend gaps are among the most reliable causes of stop-skipping losses in prop firm challenges.
-
3News Event Spike
High-impact economic releases — Non-Farm Payrolls, CPI, FOMC decisions — can move markets 50 to 200 pips in under a second during the initial reaction spike. A trader holding a position through one of these events may have a stop in place at a technically correct level, but the spread widens massively during the release and the price skips through the stop, executing far below it. A position sized for a 40-pip stop may close with a 150-pip loss. This is not a failure of the trading strategy. It is a failure to account for execution risk during illiquid, high-volatility events. The FTMO Challenge Planner flags high-impact news events on the trading calendar so you can decide in advance whether to close positions before each release.
-
4Overleveraging a "Sure Thing"
A setup appears that the trader has seen work many times. The technical confluences are strong. They size up to 3× their normal position, reasoning that the high-probability setup warrants more exposure. The trade fails — not because the analysis was wrong but because the market did something it was not supposed to do, as it occasionally will. At 3× size, the loss consumes not just the daily room but a significant portion of the maximum drawdown buffer as well. The challenge is not over immediately, but there is now very little room to have even one more average-sized losing trade for the rest of the evaluation. High-conviction sizing amplifies the damage of normal losing trades, which occur in every system regardless of setup quality.
-
5Not Accounting for Floating P&L on Open Positions
This is the most technically misunderstood cause of violations. A trader reviews their balance — $10,150 — and concludes they have $650 of remaining max drawdown room (well above the $9,000 floor). They open a new trade. What they did not account for is that they already have an open position currently floating at −$280. Their equity is not $10,150; it is $9,870. After opening the new trade, which moves against them by $900, the equity falls to $8,970 — below the $9,000 floor. The violation was caused by adding a new position without knowing the real equity figure including all open floating losses. FTMO counts equity, not balance. Always know your current equity before entering a position, not your balance.
All five scenarios share one cause: the trader did not know their precise remaining drawdown room at the moment of the decision. Either the calculation was done on balance instead of equity, or the daily and maximum limits were tracked independently rather than simultaneously, or the position size was not checked against the actual remaining buffer. Drawdown violations are almost always information failures, not strategy failures.
How to Track Your Drawdown in Real Time
The manual calculation is straightforward if done rigorously. The problem is doing it rigorously, consistently, including floating P&L, across every session for the duration of a multi-week challenge — often under the pressure of an active trade. Here is the correct method for each calculation.
Manual Calculation — Maximum Drawdown Remaining
Manual Calculation — Daily Loss Remaining
Note that today's opening equity is not the same as the initial balance. If your account has grown or contracted over previous sessions, today's opening equity will differ from the initial balance. The daily loss limit is always calculated against the current day's opening equity — not against the initial balance. Only the maximum drawdown uses the initial balance as its fixed reference.
Warning Thresholds to Set
Rather than monitoring these numbers continuously, a practical approach is to set personal warning thresholds that trigger a review before the limits are actually breached. Three levels work well across most trading styles:
These thresholds apply independently to both the daily limit and the maximum drawdown. You could be at 40% of your daily limit used but 80% of your maximum drawdown used — in which case the maximum drawdown threshold should govern your behaviour for the rest of the session, not the more permissive daily figure.
The FTMO Challenge Tracker automates all of this. It pre-calculates both remaining room figures in real time — including floating P&L from open positions — and shows your position relative to all three warning thresholds for both limits. Instead of running the calculations manually before each trade, you read the current figures directly and make the decision with accurate numbers in front of you.
Alongside tracking drawdown, maintaining a complete record of each trade's entry, exit, size, and outcome throughout the challenge is the other discipline that separates traders who pass from traders who don't. The Trading Journal Pro is built for exactly this — capturing the data from each session so patterns in your risk management and execution become visible across the full challenge period.
For traders planning their challenge strategy before it begins — setting daily targets, mapping out the minimum trading days, calculating required win rates given their historical performance — the FTMO Challenge Planner provides a structured framework for building that plan from the first day rather than improvising it mid-challenge.
Never Guess Your Remaining
Drawdown Room Again
The FTMO Challenge Tracker keeps your daily loss limit and maximum drawdown both visible and pre-calculated at all times — including open position floating P&L. Know exactly where you stand before every trade, not after you've placed it.