Updated 2026-03-08
FTMO Maximum Daily Loss Rule Explained
FTMO
Quick Answer
FTMO's Maximum Daily Loss rule limits traders to a 5% daily loss from account starting balance or equity.
The 5% limit is calculated from the higher of your starting balance or starting equity at the daily reset (00:00 CET/CEST). This includes both realized and unrealized losses from open positions. Breaching this limit immediately terminates your challenge or funded account.
Key Rule Details
Limit
5%
Dollar Value ($100,000)
$5,000
Includes
Open + Closed P&L
Resets
Daily
Breach
Account terminated
Calculation Example
Common Mistakes
Ignoring Unrealized Losses
Many traders focus only on closed trades while holding large losing positions. FTMO includes floating P&L in the daily loss calculation. On a $100,000 account, if you have $4,000 in closed losses and $2,000 in unrealized losses, you've already breached the $5,000 limit even without closing the position.
Miscalculating Reset Basis
Traders often assume the daily loss is calculated from the previous day's closing balance. FTMO uses the higher of starting balance or starting equity at 00:00 CET/CEST. If you started a $100,000 account with $3,000 profit, your daily loss limit becomes $5,150 (5% of $103,000), not $5,000.
Timezone Confusion
Not accounting for CET/CEST reset times leads to unexpected breaches. A trader in New York might think they have until midnight EST, but FTMO resets at 6 PM EST (7 PM EDT). Trading heavy size near the reset without knowing the exact time can cause violations when positions carry over.
Revenge Trading After Losses
After losing 3-4% early in the day, some traders increase position sizes to recover quickly. On a $50,000 account, being down $2,000 (4%) and then taking a large position that moves against you by just $500 more breaches the $2,500 daily limit and terminates the account.
Protection Strategies
Set Personal Daily Loss at 4%
Create your own limit below FTMO's 5% rule to account for slippage and market gaps. On a $100,000 account, stop trading when you're down $4,000 instead of risking the full $5,000. This buffer protects against unexpected price movements that could push you over the firm's limit.
Calculate Position Size for 1% Risk
Never risk more than 1% per trade to stay well within the daily limit. On a $50,000 account, limit individual trade risk to $500. Even with multiple losing trades, you'd need 5 consecutive losses to approach the $2,500 daily limit, giving you better control.
Enable Real-Time Loss Monitoring Alerts
Set alerts at 3% and 4% daily loss levels to track your proximity to the limit. Use your broker's tools or trading journal to monitor both realized and unrealized P&L throughout the day. This prevents surprise breaches from floating losses on open positions.
Avoid Trading Near Daily Reset
Stop opening new positions 2 hours before 00:00 CET/CEST to prevent overnight gaps from causing breaches. Close or reduce positions before the reset if you're already down 3-4% for the day. This eliminates the risk of weekend gaps or news events pushing you over the limit during the reset period.
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Frequently Asked Questions
Disclaimer: This guide is for informational purposes only and does not constitute financial advice. Prop firm rules change regularly — always verify current terms on FTMO's official website before purchasing a challenge. Updated 2026-03-08.