If you have spent any time in the forex or futures trading world, you have almost certainly heard of FTMO. Founded in Prague in 2014, it has grown into one of the largest and most recognised proprietary trading firms on the planet. Their evaluation model offers traders access to significant capital — up to $200,000 — without putting their own money at risk. But before you commit to a challenge, you need to understand exactly how the process works, what the rules are, and — critically — where traders most often go wrong.
This guide walks you through the entire FTMO evaluation process in detail. No marketing fluff, no vague summaries. Just the structure, the rules, and the nuances that matter when real money is on the line.
What Is a Prop Firm Challenge?
A proprietary trading firm provides capital to traders who can demonstrate consistent, rule-compliant profitability. Rather than hiring traders as employees, firms like FTMO use an evaluation model. You pay a one-time fee to access a demo trading account. You trade under real conditions. If you hit the profit targets without violating the risk rules, you receive access to a real funded account — typically worth ten to one hundred times the evaluation fee you paid.
Think of it as a skills-based audition with real consequences. The firm sets the parameters. You trade. Pass, and you access genuine capital. The firm keeps a cut of your profits — typically 10–20% — and you keep the rest. The economics are genuinely attractive for a trader with a proven, consistent strategy.
The fundamental appeal is leverage without personal liability. A trader who consistently returns 5–10% per month on a $100,000 funded account is earning $5,000–$10,000 per month while the firm absorbs all the downside risk beyond their own evaluation rules. That is a meaningfully different risk profile from trading your own capital.
The FTMO Two-Phase Evaluation
FTMO uses a structured two-phase process before granting access to a funded account. Both phases must be completed successfully. Each phase tests a different aspect of your trading — Phase 1 tests your ability to hit a target, Phase 2 tests whether you can do so consistently and not just by getting lucky once.
Phase 1 — The FTMO Challenge
In Phase 1 you must achieve a 10% profit target on your account balance within a maximum of 30 calendar days. You must also trade on a minimum of 4 separate days — meaning you cannot simply get lucky on a single day, hit the target, and claim a pass. Minimum trading day requirements exist to demonstrate that your results reflect a consistent process, not a single fortunate session.
The risk limits in Phase 1 are firm and non-negotiable. Your account cannot lose more than 5% in a single trading day (the daily loss limit), and your account can never fall more than 10% below the initial starting balance (the maximum drawdown). Breach either limit at any point and the challenge ends immediately with no appeal.
Phase 2 — The Verification
Phase 2 has a lower profit target — 5% — but a longer time window of 60 calendar days. The same 5% daily loss limit and 10% maximum drawdown rules apply identically to Phase 1. The minimum of 4 trading days still stands.
The lower target in Phase 2 is intentional. FTMO uses it to verify that Phase 1 was not a fluke. A trader who ran hot in Phase 1 and happened to catch a strong trend might struggle to replicate even 5% in Phase 2 with consistency. The firm is looking for evidence of a sustainable process, not a single lucky streak.
Once Phase 2 is complete and verified, FTMO reviews the account before activating your funded status. There is a mandatory review period between Phase 2 completion and the funded account going live. Once active, you are trading with FTMO's capital and keeping a percentage of every profit payout from that point forward.
Account Sizes and Challenge Fees
FTMO offers evaluation challenges across five account sizes, from $10,000 to $200,000. The fee you pay is for the evaluation itself — not a deposit, not a margin requirement. If you pass, the fee is refunded in full with your first profit payout from the funded account. If you fail, the fee is gone, and you need to purchase a new challenge to try again.
- $10,000 account — approximately €155 challenge fee
- $25,000 account — approximately €250
- $50,000 account — approximately €345
- $100,000 account — approximately €540
- $200,000 account — approximately €1,080
Most traders target the $100,000 account as the optimal balance between cost and potential return. At 80% profit split, a single 10% profit month on a $100,000 account generates $8,000 in trader income — a meaningful return on a one-time €540 evaluation fee, provided you pass.
The Rules in Detail — What Actually Catches Traders Out
The Trailing Maximum Drawdown
This is the single most misunderstood rule in the FTMO evaluation, and it catches experienced traders off guard regularly. FTMO uses a trailing maximum drawdown — meaning the 10% drawdown floor is not fixed at the initial balance permanently. Instead, it rises with your equity peak.
Here is a concrete example. You start a $100,000 challenge. The initial drawdown floor is $90,000. Now suppose you trade well and your equity reaches $110,000. At this point, the drawdown floor rises to $99,000. Your maximum loss from peak is always capped at $10,000 — but that $10,000 is measured from your highest reached equity, not from the starting balance.
The consequence is significant. A trader who front-loads profits early in the challenge is actually narrowing their own margin for error as they go. The better you do, the higher the floor rises, and the less room you have for a losing stretch. This is counterintuitive and is why many traders who pass Phase 1 comfortably still fail Phase 2 — they have less room than they think.
The Daily Loss Limit — Calculated From Balance, Not Equity
FTMO's 5% daily loss limit is calculated from your account balance at the start of the trading day — not your current floating equity. This distinction matters enormously when you have open positions.
Suppose your account balance is $100,000 at the start of a trading day. Your 5% daily limit is $5,000 — meaning your account cannot drop below $95,000 that day. Now suppose you open a trade that moves against you and sits at a $3,000 floating loss. You are already 60% through your daily limit with no closed trades. Open floating losses count toward the daily limit in real time. Many traders enter a session with open overnight positions without fully accounting for this, and find themselves violating the limit before they have placed a new trade.
News Trading and Expert Advisors
FTMO permits news trading — you can hold positions through high-impact releases like NFP, FOMC decisions, and CPI data. This is one of its advantages over firms that restrict news trading entirely. Expert Advisors are also permitted on a single account, provided the algorithm does not exploit latency or coordinate risk across multiple FTMO accounts simultaneously.
Profit Split and Scaling
On your funded account, FTMO starts you at an 80% profit split. After your first payout, you become eligible for the 90% split — keeping $9,000 from every $10,000 in profits. The upgrade requires completing at least one payout cycle and meeting FTMO's consistency criteria.
FTMO also offers a scaling plan for consistently profitable traders. If you average at least 10% monthly return over any four-month period, your account size can be increased by 25%. This can be applied repeatedly, with the theoretical ceiling reaching $2,000,000 in funded capital.
Why the Pass Rate Is Under 10%
FTMO's own data, and third-party analysis of the broader prop firm industry, consistently puts the self-directed trader pass rate below 10%. The rules themselves are not the primary cause. A trader generating consistent 2–3% monthly returns with disciplined risk management can satisfy FTMO's requirements comfortably without pushing their strategy to its limits.
The real cause is psychological. When a real fee is on the line, traders abandon the process that made them profitable in the first place. They oversize positions early to build a buffer. They revenge trade after a losing day. They misread the trailing drawdown and believe they have more room than they do.
The evaluation context changes behaviour. That change in behaviour — not the rules — is what ends most challenges. For traders who recognise this pattern in themselves, working with an experienced evaluation service is a rational alternative. The rules do not change, but the executor does — and removing emotional variables from a mechanical process produces measurably more consistent outcomes.