The FTMO proprietary trading firm is one of the most popular and reputable prop trading firms out there. As a forex trader, if you’re looking for a large trading account to quickly grow your profits, FTMO is a a great prop firm to get a funded account with.
Recently, a lot of new prop firms have popped up, so in this FTMO review, we’ll take an in-depth look the FTMO challenge, the FTMO rules, and whether the FTMO challenge is still the way to go for profitable traders looking for extra capital.
Who are FTMO?
FTMO is a proprietary trading firm founded in 2017. They wanted to discover talent that could trade the financial markets profitably. FTMO is based in Prague, the Czech Republic. They’ve grown very quickly and have won many awards, and they maintain a stellar reputation.
FTMO is actually synonymous with prop trading!
What is the FTMO Challenge and evaluation process?
FTMO was one of the very first companies to start the challenge model.
The challenge acts as a filter to make sure only traders of a certain capital get access to funded accounts.
Basically, you pay a fee to start the challenge. Once you have started the challenge, you have 30 days to hit a 10% profit target on a demo account.
Once you hit the 10% profit target, you have another 60 days to hit 5%. There’s also a maximum daily drawdown of 5% and a maximum drawdown of 10%. That means if you lose more than 5% in a day, or 10% total, you are disqualified.
You can take the challenge any number of times. It doesn’t matter how many attempts it takes for you to pass it, just that you pass it.
Of course, you’ll have to pay a fee to start a new challenge every single time!
The idea behind the challenge is test your trading skills and make sure that tire kickers and people who don’t employ sound risk management end up with a fully funded account.
If you manage to pass the challenge, you can get up to $200,000 in trading capital.
$200,000 is a really good account size to have. If you can do 5% profit per month, you’re looking at $10,000 per month in profits.
Is the FTMO challenge realistic?
Achieving the trading objectives is all that stands between you and a funded FTMO account.
But FTMO has to make money too, so the challenges are intentionally designed to be difficult to pass. That’s not to say they’re impossible to pass, as many traders, thousands, in fact, are profitable with FTMO.
Beginner traders can easily fall into the trap of getting enticed by the potential of a big account and try to take the challenge only to fail it.
I would know. I’ve failed 4 challenges before I got my act together and passed the challenge.
The FTMO challenge has pretty diffcult targets. Realistically, 10% is difficult to achieve in 30 days unless you take larger risks or trade multiple times per day.
Of course, trading too much or taking too much risk is also a recipe for disaster.
Even a consistently profitable trader does not always make 10% per month, but there a few risk management strategies that position you to pass the evaluation process.
Really, it’s only the first 30 days that are difficult. It’s easy to come under pressure and take trades that you shouldn’t have.
You’ll probably find yourself trading more aggressively for the first phase of the evaluation process and then tone down your trading for the second phase, which is only 5% in 60 days.
In fact, the second phase is called the risk management phase for a reason!
The first phase is designed to make you trade aggressively to hit the higher profit target, and the second phase is designed to make you tone down your trading so you pass without blowing the account after getting too excited!
You can sign up for a free FTMO challenge as a demo
The unique thing about FTMO as a prop trading firm is that they offer a free demo so that potential FTMO traders can get used to the trading platform and dashboard, as well as practice trading within the rules.
The demo is a great way to get your feet wet before you invest a significant amount of money in taking the challenge.
Opening multiple accounts
Once you pass a challenge and start trading a funded account, you can take a second challenge and start a second account. This way, you can actually use the profits from your first funded account to fund your next FTMO accounts.
There is a maximum cap of $400,000, so all of your funded accounts together can only total $400,000.
Read more: FTMO vs City Traders Imperium
Which of the FTMO Challenges is best for you?
FTMO offers 5 different challenges and two ways to pass them.
The challenges are available for account sizes of:
You can opt for either the normal model or the aggressive model.
In the Normal model, you have a 10% profit target in 30 days for phase 1 of the evaluation and a 5% profit target in 60 days for phase 2. You have a maximum daily loss of 5% and a maximum total loss of 10%.
These percentages are the same for all account sizes.
In the Aggressive model, you have a 20% profit target in 30 days for phase 1 of the evaluation and a 10% profit target in 60 days for phase 2. You have a maximum daily loss of 10% and a maximum total loss of 20%.
You get a slightly higher payout percentage in the Aggressive model.
Once you pass the challenge, there are no longer any minimum profit targets, but the maximum daily loss and maximum loss rules remain the same.
The $10,000 challenge is 155 Euros and the $200,000 challenge goes all the way up to 1000 Euros.
The challenge that you choose should align with both your budget and your target income. Remember, it’s possible to fail the challenge too, so if you fail a $200,000 challenge, you’re out 1000 Euros.
Also, consider how much your average monthly return is and how that aligns with your income target.
For example, you may have an average monthly return of 5%.
That means you can make around:
- $500 per month if you trade the $10,000 account
- $1000 per month if you trade the $20,000 account
- $2500 per month if you trade the $50,000 account
- $5000 per month if you trade the $100,000 account
- $10,000 per month if you trade the $200,000 account
Consider your income goals and choose your challenge accordingly.
Remember, you can always start with a small account and complete a second challenge later. In fact, if this is your first challenge, it may be better to invest an amount you can afford to lose two or three times.
What’s the best way to pass a challenge?
There are many ways to pass an FTMO challenge which I’ll discuss in another article, but the easiest way to pass is by using a compounding risk management strategy.
Ideally, you want to hit your profit target as soon as possible to prevent you from overtrading or taking stupid trades.
The compounding strategy works like this:
First, you define your maximum risk per trade. Let’s say that it is 1%.
When your first setup comes, you place a trade with a 1:3 risk-reward ratio. This means you stand to make 3%.
In numbers, you would have risked $100 on a $10,000 account to make $300.
On your next trade, you’ll risk the 3% that you made on the first one.
If your next setup is also a 1:3 setup, you’ll risk $300 to make $900.
If this trade is successful, you’re now $1200 in profit and have passed the challenge.
If the trade goes against you, you’re back to break even and you can start the cycle again.
What are the FTMO Rules?
As we mentioned above, FTMO’s main rules are regarding daily drawdowns and total drawdowns.
There are some interesting nuances to keep in mind, though.
You are free to trade the news during the challenge and evaluation phases. However, once you’ve passed the challenge and have a proper FTMO account, you can’t open a trade within 2 minutes before or after a news event. The trade is only on the affected instrument, of course.
For example, NFP news affects USD pairs, so you couldn’t trade a USD pair within 2 minutes before or after the NFP, but you can trade AUD/NZD or any other non-USD cross.
Also, if you’re in an open position and your position is stopped out or hits a take profit within 2 minutes of a news event, that’s considered a violation of the rules.
You can hold through news events if you have a Swing account.
Holding positions overnight/over the weekend
Holding positions overnight is not an issue. Holding trades over the weekend is.
In the challenge and evaluation phase, you may hold positions over the weekend. Once you pass the challenge, you must close your open positions by the end of the trading day before the market closes for the weekend OR if the break between sessions is longer than 2 hours.
Instruments you can trade
You’re free to trade all instruments available to you on the trading platform. This includes currencies, metals, crypto, and some indices.
Strategies you can trade
You can actually trade any strategy you like. You’re also free to use EAs and copy trades. As long as you don’t breach the rules, you’re good to go.
Can you redo a challenge
If you violate any of the rules at any point in time, your challenge is automatically failed and if you have a live account, your agreement is automatically terminated.
However, if you manage to end the 30 day/60 day trading period without breaching any rules and in profit, you can redo the challenge for free.
What is the profit split like?
When you start out, the profit split is 80/20, with you keeping 80% and FTMO keeping 20%. Once you are eligible for the scaling up plan, your profit split increases to 90/10.
80/20 and 90/10 are pretty much the standard for any proprietary trading firm that offers a 30 day and 60 day challenge. The split usually decreases if the challenge period is longer, but more on that later.
How is the scaling plan?
If you can be 10% profitable in 4 months(2.5% per month), FTMO will increase your account balance by 25%. There’s no upper limit to how much your balance can increase, so if you were to start with a $200,000 account, you could end up managing nearly half a million dollars in a little over a year.
Other prop firms have more aggressive scaling opportunities. There are some like the 5%ers who will double your account for every 10% you are able to grow.
However, those firms also have much tighter loss tolerance.
What happens after you sign up?
Once you sign up and pay for the challenge, you’ll be provided with an MT4/MT5/cTrader login, depending on what you opt for.
Use that information to log in to the trading platform and trade as you normally would. All of your trades will automatically get synced to your client dashboard, where you’ll be able to view your account analysis, trades, your profit/loss percentage, and your current equity curve.
The FTMO dashboard is one of the best in the industry, and rightly so because they’ve been in the business for so long.
How do FTMO payouts work?
Once you pass the challenge, you are eligible for payouts every 2 weeks as long as you are in profit. Your challenge fee will also be refunded with your first payout.
You’ll have to invoice FTMO for your payout amount and they’re very quick with processing payouts. Traders usually see the funds within 24 hours.
One of the best ways to build a successful trading career in 2022 and beyond is to trade with a proprietary trading firm. Even though the challenge and FTMO verification is a little tough, once you’ve passed, it’s quite smooth sailing.
FTMO’s reputation as one of the oldest online prop trading firms gives you the reassurance you need that they’re not going to suddenly shut down! As long as you trade within their rules, you’ll be good to go.
Frequently asked questions
Does FTMO give you a live account?
FTMO does not give you a live account to trade with. They state as much on their website. Even the “funded” accounts are still demo accounts. FTMO has an algorithm that they use to copy their trader’s trades on their own account.
Is trading on FTMO halal?
Forex trading involves paying a swap(interest) if you hold positions overnight. You can ask for a swap-free Sharia compliant account when you pass your challenge.
Is FTMO a scam?
FTMO is not a scam. They’re a legitimate company and thousands of traders are making thousands of dollars per month trading on financial markets with FTMO.
How do you pay taxes on FTMO earnings?
You can make your invoice to FTMO as a private individual or as a company. The income you receive from FTMO payouts will be subject to whatever tax laws your country of residence has. Consult a local tax professional for more information.