FTMO Drawdown Rules Explained: Daily Loss, Max Loss, and the Prague Reset

Most failed FTMO Challenges do not end because the trader picked bad trades. They end because the trader measured the rules wrong — watched realized P&L while the rule watched equity, or assumed "the day" ended at their bedtime while the rule reset at Prague midnight. This guide explains FTMO's two loss rules the way the firm actually computes them.

Figures below are FTMO Global's published objectives, verified 2026-08-06 against FTMO's own pages. FTMO has revised its rules twice in 2026 already, and FTMO USA (the OANDA partnership) publishes its own programs — always confirm the current terms for *your* program before trading them.

Rule 1 — the Maximum Daily Loss

On the classic 2-Step Challenge the daily limit is 5% of the initial balance (3% on the 1-Step program). Two mechanics decide whether you actually stay inside it:

It is measured on equity, floating losses included

The daily loss is computed against your equity including open positions, not your realized P&L. If your closed trades are flat on the day but an open position is down 4.9%, you are one tick from violation *right now* — closing the trade later "in profit" does not retroactively fix a limit that was breached while it floated. Futures traders switching from realized-only firms like Topstep get caught by this constantly; it is the single most important FTMO mechanic to internalize.

The day resets at broker-server midnight, Prague time

"Daily" means the broker's server day — midnight CET/CEST. For a US-based trader that is late afternoon/evening local time: a New York session position carried past the reset starts *tomorrow's* daily budget with today's floating P&L already loaded into it. Know your reset hour in your own timezone before your first session, not after your first violation.

Rule 2 — the Maximum Loss

2-Step Challenge: static, and that is a gift

The classic Challenge's overall limit is 10% of the initial balance, fixed on day one. It does not trail your equity high. Every dollar of profit is genuine cushion: after a +6% week, your distance to the line is 16% of initial balance. This is the deepest difference from the trailing drawdown that defines futures prop accounts, where profit drags the line up behind you — and it changes how the account *feels* after a winning streak.

1-Step: end-of-day trailing — a different animal under the same brand

FTMO's 1-Step program uses a 10% maximum loss that trails on an end-of-day basis — combined with its tighter 3% daily limit. Two consequences: profit does not become permanent cushion the way it does on the 2-Step, and intraday equity highs do not move the line (only end-of-day marks do). Same logo, materially different risk maths — read the objectives for the specific program you bought, and never let one FTMO program's intuition price another's risk.

What this means for how you size and track

• Track equity distance, not realized P&L. Your real number all session is *equity

minus today's violation level*. If your journal or dashboard shows only closed P&L, it is showing you the wrong rule.

• Budget the open position into the day. A stop 2% away on an account with 3% of daily

room left is a plan to survive; the same stop with 1.5% of room is a violation with extra steps. The sizing logic is the same room-based arithmetic from our contracts guide — just measured on equity.

• Respect the Prague clock. Decide before the session what happens to positions still

open at your local reset hour. "I'll watch it" is not a decision.

• Set a personal limit inside FTMO's. The daily-loss discipline

that keeps futures accounts alive transfers directly: a personal stop at half the firm's limit means a tilted session ends while the Challenge survives.

Propfy's FTMO journal encodes exactly these mechanics — equity-based daily loss with the Prague reset, static vs trailing per program, each FTMO entity's rules verified and stamped separately. MT4/MT5 statement import works today; automatic sync is rolling out.

Frequently asked questions

How does the FTMO 5% daily loss rule work?

On the 2-Step Challenge, your equity — including floating P&L on open positions — may not drop more than 5% of initial balance within one broker-server day, which resets at midnight Prague time (CET/CEST). Open-trade drawdown counts in real time; the limit is not about what you close, but about where your equity trades.

Is FTMO's maximum loss trailing or static?

Program-dependent: the classic 2-Step Challenge's 10% maximum loss is static against the initial balance and never moves, while the 1-Step program's 10% limit trails on an end-of-day basis. Verify the current objectives for your exact program — the two behave very differently after a profitable week.

What time does the FTMO daily loss reset?

At broker-server midnight in Prague time (CET/CEST). Translate that into your local timezone before your first session — for US traders it lands in the afternoon or evening, which means positions held through a New York session can straddle two FTMO "days".

Can you pass FTMO with open-position drawdown near the limit?

The rule only cares whether equity crossed the line, not how close it came — but trading with floating drawdown near the daily limit means one spread widening or news tick ends the account. Practically: size so your stop-out lands well inside the day's remaining room, and treat 80% of the daily limit as your personal hard stop.

Measure the rule the firm measures

FTMO's drawdown rules are neither harsh nor lenient — they are just *specific*: equity maths, Prague clock, static or EOD-trailing per program. Traders who encode those specifics into their sizing and their journal stop losing Challenges to accounting surprises, and start losing them only to trading — which is the only fight worth having.