FTMO
30-Second Definition
FTMO is one of the oldest and most established proprietary trading firms in the retail industry. It provides traders who pass a strict two-step evaluation process with access to simulated capital and a high profit split.
Understanding FTMO
FTMO is widely considered the industry standard in retail proprietary trading. Based in Prague, Czech Republic, they pioneered the modern “evaluation model” where traders pay a fee to prove their skills in a simulated environment. If successful, the trader is provided with a simulated funded account where they can earn real money based on the profits generated.
The process is broken down into a strict two-step evaluation designed to filter out gamblers and identify consistent, disciplined traders who can manage risk effectively.
Key Characteristics
- Two-Step Evaluation: Consists of the FTMO Challenge (Step 1) and Verification (Step 2).
- Profit Split: Traders keep 80% of their profits by default, which can scale up to 90% through their scaling plan.
- Strict Risk Rules: Enforces a 5% Daily Loss Limit and a 10% Maximum Drawdown.
- No Time Limits: FTMO recently removed maximum trading days, allowing traders to take as much time as they need to pass.
- Bi-weekly Payouts: Funded traders can request payouts every 14 days.
Why It Matters
Understanding how FTMO operates is essential because their rule structure has become the blueprint for almost every other prop firm in the industry. Mastering FTMO’s specific drawdown calculations and profit targets gives you the foundation needed to succeed anywhere.
Furthermore, FTMO’s reputation for reliable payouts makes them a primary target for serious retail traders looking to scale their capital base without risking their own life savings.
Visual Explanation
Real Trading Example
Imagine a trader who has a highly profitable edge but only $1,000 in personal capital. Earning 5% a month on $1,000 yields just $50—barely enough to cover data fees. By purchasing a $100k FTMO Challenge, passing the evaluation, and generating that same 5% return on the simulated funded account, the trader earns $5,000. After the 80% profit split, the trader takes home $4,000.
This leverage allows the trader to execute their edge mathematically, rather than taking oversized, emotional risks trying to flip a small personal account.
Common Mistakes
Common Mistake
Rushing the Challenge: Because there is no longer a time limit, the most common mistake is overleveraging to pass quickly. Traders treat it like a sprint, hit a losing streak, and breach the Daily Loss Limit.
Professional Tips
Pro Tip
Risk Per Trade: Professionals risk no more than 0.5% to 1% per trade during an FTMO evaluation. Since the maximum drawdown is 10%, risking 1% gives you a buffer of 10 consecutive losses before failing.
FAQ
Is FTMO a scam? No, FTMO is a highly reputable company operating since 2015. They have a proven track record of paying out millions to successful traders.
Do you trade real money with FTMO? No, you trade on a simulated (demo) account. FTMO copies the trades of successful traders to their live corporate accounts and pays the trader a split of the profits generated.
Can you hold trades over the weekend? On a standard FTMO account, you must close trades over the weekend. However, they offer an “FTMO Swing” account type that permits weekend holding and trading during major news events.
Still have questions? Ask TradeGuardian AI.
Get instant, cited answers from our proven library of frameworks and strategies.