FTMO splits across two evaluation paths (1-Step and 2-Step) with rules that differ meaningfully — 3% vs 5% daily loss, 10% trailing vs 10% static max loss, and a 50% Best Day rule on Funded payouts. Full rule breakdown in my FTMO rules guide, or read my complete FTMO review. Sign up at FTMO or check the Help Center.
FTMO's daily loss limit (DLL) is the single rule that trips more traders than any other. The 1-Step Challenge runs a 3% DLL. The 2-Step runs 5%. Both are calculated from your initial starting balance, not from your current equity or a moving high-water mark. Miss that distinction once and you'll blow an account while thinking you're still safe.
As of May 2026, FTMO operates two evaluation paths with separate DLL thresholds, and the gap between them matters a lot for how you size trades and manage intraday risk. This guide covers exactly how each threshold works, what counts toward it, when it resets, and how to trade without hitting it.
What is FTMO's daily loss limit?
The daily loss limit is the maximum amount your account balance can drop in a single trading day before FTMO terminates the account. If you hit it, the session is over. Not paused. Not a warning. The challenge fails or the funded account closes, depending on which stage you're at.
FTMO calculates the DLL against your initial starting balance. That number is locked in when you open the account and never changes during that account's life. It does not recalculate based on profits you've made or equity peaks you've reached.
Two thresholds apply across FTMO's product range:
- 1-Step Challenge: 3% of initial balance
- 2-Step Challenge: 5% of initial balance
On a $100K account, that is $3,000 and $5,000 respectively. On a $10K account, $300 and $500. Every dollar of drawdown from every source counts toward the limit: closed trades, open floating losses, commissions, swap charges. None of those are exempted.
The DLL resets at 23:00 server time (CET) every day. After that reset, you start fresh with a clean ledger for the next session.
Understanding these two numbers before you open your first trade on FTMO is not optional. They determine your maximum position size, your session cutoff discipline, and whether you can survive a bad trading day without losing the account.
How does the 3% DLL on the 1-Step work?
The FTMO 1-Step Challenge is FTMO's newer evaluation product. Pass a single phase with a 10% profit target, stay within the loss rules, trade at least 4 days, and you're funded. The trade-off is a tighter ruleset, and the DLL is the sharpest constraint: 3% of initial balance, fixed for the life of the account.
| Account Size | Initial Balance | 3% Daily Loss Limit |
|---|---|---|
| $10,000 | $10,000 | $300 |
| $25,000 | $25,000 | $750 |
| $50,000 | $50,000 | $1,500 |
| $100,000 | $100,000 | $3,000 |
| $200,000 | $200,000 | $6,000 |
Paul scalps the 1-Step primarily on $50K and $100K sizes. At $3,000 per day on a $100K account, you have room but not luxury. Scalping limits per-trade exposure by design, but position sizing still has to be deliberate. A single runaway trade in a volatile session can eat $1,500 of that $3,000 in one candle.
The discipline on the 1-Step is treating the DLL as an absolute ceiling, not a zone to trade near. Set your personal daily session limit at 50 to 60% of the DLL, $1,500 to $1,800 on a $100K account, and treat the remaining buffer as insurance against slippage, commissions, and swap charges that arrive unexpectedly near the server reset.
The 1-Step has a separate trailing max loss of 10%. That is a different rule from the DLL and operates on a different schedule. The DLL is intraday and resets at 23:00. The trailing max loss is cumulative and does not reset with profits withdrawn. For a full breakdown of how the two interact, see the FTMO rules overview.
One more rule specific to the 1-Step: the Best Day Rule. A single profitable day cannot account for more than 50% of your total accumulated profit. This does not affect the daily loss limit at all; it only governs the profitable side of your trading. It is worth knowing because it shapes how aggressively you should size up on good days, which in turn shapes the risk you run on bad days.
How does the 5% DLL on the 2-Step work?
The FTMO 2-Step Challenge is the classic two-phase path: 10% profit in Phase 1 (Challenge), 5% in Phase 2 (Verification), then a funded account. The DLL applies in both phases and carries through to the live funded stage: 5% of initial balance, fixed.
| Account Size | Initial Balance | 5% Daily Loss Limit |
|---|---|---|
| $10,000 | $10,000 | $500 |
| $25,000 | $25,000 | $1,250 |
| $50,000 | $50,000 | $2,500 |
| $100,000 | $100,000 | $5,000 |
| $200,000 | $200,000 | $10,000 |
$5,000 on a $100K account gives meaningfully more room than the 1-Step's $3,000. Swing traders and news event traders tend to prefer the 2-Step path because wider stop-losses fit more naturally inside that 5% boundary. The Swing variant of the 2-Step adds weekend holding and news trading permissions on the live funded stage. Its drawdown rules are identical to the Standard variant: same 5% DLL, same loss mechanics.
The 2-Step max loss is 10% static. The floor is set once and stays there regardless of profits made. That is the opposite of the 1-Step's trailing max loss, which rises as your account grows. On the 2-Step, if you open a $100K account, the max loss floor stays at $90,000 forever. Grow the account to $120,000 and your daily loss limit is still $5,000 (3% of the original $100K starting balance, but 5% of that $100K is $5,000) and your max loss floor stays at $90,000. That is a significant practical difference for traders who have built a profit buffer.
For a complete breakdown of Phase 1 vs Phase 2 targets, Standard vs Swing variants, and how the Scaling Plan works on the 2-Step, read the dedicated FTMO 2-Step Challenge guide.
When does the daily reset happen?
FTMO runs its server on Central European Time (CET). The daily loss limit resets at 23:00 CET / CEST every day.
During European summer (CEST, UTC+2): 23:00 Prague time equals 21:00 UTC, which is 17:00 US Eastern. During European winter (CET, UTC+1): 23:00 Prague time equals 22:00 UTC, which is 17:00 US Eastern.
The reset is not midnight UTC. This matters because FTMO is a Prague-based firm and its server clock follows the Czech Republic's time zone. Traders in North America, Asia, and the Middle East all need to convert this correctly.
Why does it matter in practice? Because positions held near the daily boundary have their floating losses counted for that day right up until 23:00. A position opened at 22:45 CET will have its swap charge applied before the reset if it rolls over. Open floating losses at 22:58 CET count toward that day's DLL. If the same position is still open at 23:01, whatever loss it carries belongs to the next day's calculation.
A practical rule: if you are within 20% of the DLL threshold with 30 minutes left in the server day, close positions. You save one swap charge by staying open. You risk account termination. That trade is not worth taking.
What counts toward the DLL?
No category of loss is exempt. Everything that reduces your account balance counts.
- Realized losses from closed trades. The obvious category.
- Unrealized floating losses from open positions. FTMO monitors live equity in real time. You do not have to close the trade.
- Commissions charged on trade entry and exit, which vary by platform and instrument but hit immediately upon execution.
- Swap charges for overnight positions. These apply at the daily rollover before the 23:00 reset and count against that day's DLL.
The floating loss point is the one most traders underestimate. If your open positions are collectively down $3,100 on a $100K 1-Step account, the DLL breach is already registered even if every trade is still technically open. FTMO's system reads live equity, not just closed P&L.
Swap charges can compound this problem. On high-leverage currency pairs, particularly exotic pairs or positions held through a triple-swap Wednesday rollover, swap can be a meaningful negative number. If you are trading close to the DLL threshold with a carry-negative position open, the swap charge alone can push you over the line at 22:00 CET before you've even placed another trade.
The safest mental model: treat the DLL as if it were a real-time running balance. Check it before every new trade entry. Know your current day's loss figure, including open floating losses, and size your next trade so that a full stop-out still leaves you inside the boundary.
How do you avoid breaching it?
Position discipline and pre-trade sizing. There is no technique that replaces those two things.
Know your number before the session starts. On a $100K 1-Step, write "$3,000" on paper before you open a chart. On a $100K 2-Step, write "$5,000." These are fixed targets that do not change because you had a good week.
Set a personal daily session limit at 50 to 60% of the DLL. If the DLL is $3,000, your personal cutoff is $1,500 to $1,800. The buffer from there to the actual limit is not extra room to trade in; it is insurance against the things you cannot control: slippage on entries, spread widening in fast markets, swap charges, platform latency. Treat that buffer as already spent.
Set stop-losses before every trade entry. Not mental stops. Actual orders on MT4, MT5, or cTrader. If you are not willing to define the stop before entering, you should not enter.
Track your position count. Scalping means many trades, and many trades means many commissions. Twenty scalp trades with a $50 commission each is $1,000 in commission cost before a single trade goes against you. On a $100K 1-Step with a $3,000 DLL, 20 trades in a day costs you 33% of your daily allowance in commissions alone. That math changes how many setups are worth taking.
Stop trading when you hit the personal session limit. This sounds obvious. It is not obvious when you are down $1,500 in the first hour and the market looks like it is about to reverse. The DLL does not care about your read on the market. It terminates on math.
Paul's approach on the 1-Step has been scalping with tight stops, which structurally limits per-trade exposure. The risk is not the individual stop-loss size. It is sequence risk: the number of losing trades you take in a bad session compounding against the same fixed DLL. Fifteen small losers in a row on a $100K 1-Step can hit $3,000 faster than a single large loss.
What happens if you breach?
No second chances, no grace period, no appeals.
During a Challenge phase: The challenge terminates immediately. FTMO sends a notification and the account closes. To try again, you pay the full challenge fee again. The initial challenge fee is not refunded at this point because refund happens with the first payout from a funded account, and you never reached that stage.
On a funded FTMO Account: The account is closed immediately. Payouts you already withdrew before the breach are yours to keep. Profits sitting in the account that had not yet been paid out are forfeited. The funded account is gone and cannot be reinstated.
There is no appeals process for DLL breaches. The rule is objective: your equity crossed the threshold at a recorded timestamp. FTMO does not make exceptions for news spikes you didn't know about, platform execution errors, or freak spread widening. The system closes the account and the decision is final.
This is why funded account discipline matters as much as challenge discipline. Some traders get funded and relax their sizing rules because the pressure of the challenge is gone. That is the wrong adjustment. The funded account DLL is identical to the challenge DLL. The only difference is that a funded account breach also means you lose access to real trading capital and have to start the entire evaluation again from scratch.
How does FTMO DLL compare to peers?
FTMO's DLL sits at different positions on the market spectrum depending on which path you choose. As of May 2026:
| Firm | Path | Daily Loss Limit | Basis |
|---|---|---|---|
| FTMO | 1-Step Challenge | 3% | Initial balance |
| FTMO | 2-Step Challenge | 5% | Initial balance |
| [The5ers](/prop-firms/the5ers) | Black Arrow | 4% | Initial balance |
| [FundedNext](/prop-firms/fundednext) | Stellar 2-Step | 5% | Initial balance |
| [FundingPips](/prop-firms/fundingpips) | Standard | 4% | Initial balance |
| [E8 Markets](/prop-firms/e8-markets) | Standard | 4% | Initial balance |
FTMO's 2-Step DLL at 5% is competitive. It matches FundedNext Stellar and is wider than FundingPips and E8. If you want a 5% daily limit with standard two-phase evaluation, FTMO's 2-Step is one of the few places that offers it at this pricing level.
FTMO's 1-Step at 3% is the outlier. It is noticeably stricter than every major competitor offering a single-phase evaluation. The offset FTMO provides is the profit split: the 1-Step pays 90% from day one, with no scaling requirement to reach that figure. The 2-Step starts at 80% and only upgrades to 90% after qualifying for the Scaling Plan. Over the lifetime of a funded account, that 10% difference in base payout is substantial.
For traders coming from a futures background, note that FTMO is a Forex/CFD firm. No futures contracts, no CME instruments. The DLL mechanics work the same way in concept, but the underlying volatility profile differs. Forex pairs rarely gap overnight the way futures do after a major macro event. That makes the 3% 1-Step DLL in practical terms somewhat less punishing than a 3% DLL on a futures account, where a single gap open can move against you before you can react. For futures-focused alternatives, see Lucid Trading or Topstep.
For a direct head-to-head on full rules, profit splits, and pricing, see the FTMO vs The5ers comparison and the FTMO vs FundedNext comparison.
The bottom line
The daily loss limit is one of three rules that will terminate your FTMO account if you ignore it. On the 1-Step, 3% of initial balance means $3,000 on a $100K account, fixed for that account's life. On the 2-Step, 5% gives you $5,000. Neither number moves up when you profit.
Both reset at 23:00 CET. Both count floating losses, commissions, and swap, not just closed trades.
The practical implication is straightforward: size down so your maximum open risk at any time stays below 50 to 60% of your DLL. Let the remaining buffer absorb what you cannot predict. The traders who stay funded the longest are not the most aggressive; they are the ones who never let a bad session turn into a terminated account.
Paul has been trading FTMO's 1-Step for roughly four years and has withdrawn $15K+ in real payouts. On the $50K and $100K sizes he trades most heavily, the 3% DLL has never been the primary failure mode. Position sizing discipline is. That is the skill worth developing before you spend money on a challenge.
For the full picture of FTMO's rules including the trailing max loss, profit targets, and payout structure, read the FTMO rules overview, the FTMO accounts overview, and the FTMO payout rules guide.
Frequently Asked Questions
What is FTMO's daily loss limit?
FTMO has two daily loss limits. The 1-Step Challenge uses a 3% daily loss limit calculated from the initial starting balance. The 2-Step Challenge uses a 5% daily loss limit, also from initial balance. Both reset at 23:00 server time (CET). Breach either and the account terminates immediately.
How is FTMO's daily loss limit calculated?
Always from the initial starting balance, not current equity, not a peak balance. On a $100K account opened at $100,000, the 1-Step DLL is always $3,000 and the 2-Step DLL is always $5,000, even if you've grown the account to $112,000. The floor does not move.
What counts toward the FTMO daily loss limit?
All of these count: realized losses from closed trades, unrealized floating losses on open positions, commissions charged on trades, and swap charges for overnight positions. FTMO monitors live equity. You don't have to close a trade to breach. A losing open position that crosses the threshold triggers the breach in real time.
When does FTMO's daily loss limit reset?
At 23:00 Central European Time (CET/CEST depending on the time of year). Not midnight UTC. FTMO's server runs on Prague time. During European summer (CEST, UTC+2), that is 21:00 UTC. During winter (CET, UTC+1), it is 22:00 UTC.
What is the 1-Step daily loss limit at every size?
$10K account: $300. $25K: $750. $50K: $1,500. $100K: $3,000. $200K: $6,000. All exactly 3% of initial balance.
What is the 2-Step daily loss limit at every size?
$10K account: $500. $25K: $1,250. $50K: $2,500. $100K: $5,000. $200K: $10,000. All exactly 5% of initial balance.
What happens if you breach the FTMO daily loss limit?
The account is terminated immediately. During a challenge phase, you fail and must repurchase the challenge at full price to try again. No refund at this stage. On a funded account, the account is closed and any accumulated profits not yet withdrawn are forfeited. No appeal process. The rule is system-enforced.
Does the 1-Step DLL change as your account grows?
No. It stays at 3% of the original starting balance for the life of that account. A $100K account always has a $3,000 DLL. The 1-Step max loss is trailing and does shift as you profit, but the DLL is fixed. They are two separate rules.
How do you avoid breaching the FTMO daily loss limit?
Set hard stop-losses on every trade before entry. Keep total open risk at any one time below 50 to 60% of your DLL, not at the ceiling. On the 1-Step at $100K that means capping open risk at $1,500 to $1,800 and leaving the remaining buffer for commissions, slippage, and gaps. Never increase position size after a bad start to a session.
Is the Swing variant daily loss limit different?
No. The Swing variant of the 2-Step Challenge has the same 5% DLL as the Standard variant. Swing only adds permission to hold positions over weekends and through high-impact news events. The drawdown rules are identical.
How does FTMO's DLL compare to FundedNext?
FundedNext Stellar 2-Step uses a 5% daily loss limit, matching FTMO's 2-Step. FundedNext Stellar 1-Step uses 4%. FTMO's 1-Step at 3% is stricter than both FundedNext options, but FTMO's 1-Step pays 90% from day one where FundedNext's Stellar 2-Step starts at 80%. Full comparison in the FTMO vs FundedNext article.
What is the Best Day Rule and does it interact with the DLL?
The Best Day Rule is a separate consistency rule on the 1-Step only. It limits a single day's profit to no more than 50% of your total accumulated profit. It does not affect the daily loss limit at all. The DLL and the Best Day Rule operate independently on opposite sides of the ledger.