FTMO Daily Drawdown Rules Explained (2026 Guide)

The FTMO daily drawdown limit is the single most common reason traders fail their funded accounts. Understanding exactly how it works — and how to manage it in real time — is the difference between keeping your account and losing it.

What Is the FTMO Daily Drawdown Rule?

FTMO allows a maximum daily loss of 5% of your account balance. This means:

• $10,000 account → max daily loss: $500
• $25,000 account → max daily loss: $1,250
• $100,000 account → max daily loss: $5,000
• $200,000 account → max daily loss: $10,000

If your account balance drops by this amount in a single trading day, your account is immediately terminated — regardless of your overall P&L.

Track your daily limit in real time with our Prop Firm Daily Drawdown Calculator.

How Does FTMO Calculate Daily Drawdown?

FTMO uses equity-based daily drawdown, calculated from the balance at the start of the trading day (midnight Central European Time).

Example:

• Starting balance: $100,000
• Daily drawdown limit: 5% = $5,000
• You must not let your equity drop below $95,000 at any point during the day

⚠️ Critical: This is based on your equity (including open positions), not just your closed P&L. If you have open trades that are showing a floating loss of $5,000, you have already hit your limit — even if you haven't closed the trade.

Daily vs. Maximum Drawdown

FTMO has two drawdown rules you must respect simultaneously:

| Rule | Limit | Resets? | |------|-------|---------| | Daily Loss Limit | 5% | Every day at midnight CET | | Maximum Loss Limit | 10% | Never — tracked from initial balance |

The daily limit resets each day. The maximum drawdown does not reset — it tracks cumulatively from your initial $100,000. If you've lost $8,000 over multiple days, you only have $2,000 more to lose before breaching the maximum.

FTMO Challenge vs. Verification: Same Rules Apply

Both the FTMO Challenge (Phase 1) and Verification (Phase 2) apply identical drawdown rules:

• 5% daily loss limit
• 10% maximum loss limit

Many traders pass the Challenge with good discipline, then relax during Verification and breach the rules. The rules are identical in both phases.

How to Manage Your Daily Drawdown

Calculate your limit before the first trade

Before you place any trade, know exactly:

1. What is my starting balance today?
2. What is 5% of that?
3. What is my absolute floor (balance I cannot go below)?

Use a hard stop at 70–80% of your limit

Professionals stop trading when they've used 70–80% of their daily limit. This gives a buffer for:

• Slippage on stop losses
• Floating losses on open positions
• Unexpected news events

Example: $100,000 account. Daily limit = $5,000. Stop trading when down $3,500–$4,000.

Never trade into major news events when near your limit

If you're already down $3,000 on a $100,000 account and a Fed announcement is in 30 minutes, close your positions. The risk of a $2,000 spike is not worth it.

Track equity, not just closed P&L

Most traders track their closed profits and losses, ignoring open positions. FTMO tracks your equity — the real-time value of your account including all open trades. A floating loss counts against your daily limit.

What Happens If You Breach the Daily Limit?

Your account is immediately terminated. FTMO's risk management system closes all positions and locks the account. There is:

• No warning
• No grace period
• No exceptions

You will receive an email notification, and you must restart the challenge (paying the challenge fee again) or purchase a new account.

Common Scenarios That Cause Breaches

Scenario 1: Revenge trading after early losses You lose $2,000 in the morning. You increase position size to "make it back." One bad trade later, you're down $5,200. Account terminated.

Scenario 2: Holding through news You're up $1,000, then hold through a major announcement. Price moves $500 against you in seconds. You're now down $4,500 with floating losses.

Scenario 3: Ignoring floating losses You have 3 open trades, each with a $1,500 floating loss. Your equity is already at the limit before you even check.

Scenario 4: Not knowing what day it is (time zones) FTMO resets at midnight CET. If you're in New York, that's 6 PM EST — mid-afternoon. You can accidentally reset your limit and re-use it on the same calendar day you think is "tomorrow."

FTMO Daily Drawdown Calculator

Use our calculator to track your exact remaining budget during a session:

1. Enter your account size ($100,000)
2. Enter 5% as the max daily drawdown
3. Enter your starting balance for today
4. Update your current P&L as you trade

The calculator shows your remaining budget, a warning at 70%, and a breach alert at 100%.

→ Open Prop Firm Daily Drawdown Calculator

Summary

• FTMO's daily drawdown limit is 5% of your starting balance for the day
• It's based on equity (includes open positions), not just closed P&L
• It resets at midnight CET — know your time zone
• Stop trading at 70–80% of your daily limit as a safety buffer
• Breaching results in immediate account termination with no exceptions
• Track it in real time with a drawdown calculator