Risk Management Guide for FTMO — Rules, Limits, and Calculator
FTMO's risk framework combines a 5% daily loss limit with a 10% maximum drawdown, creating a dual-layer protection system that demands disciplined position sizing. The daily reset mechanism at midnight CE(S)T means your risk tolerance adjusts based on your highest balance, making consistency crucial for long-term account growth.
Position Size Calculator
Configure below
pips
0.5%5%
FTMO Risk Rules
Max Daily Loss
—
Max Total Loss
—
Daily Loss Basis
higher of starting balance or starting equity at daily reset (00:00 CE(S)T)
Total Loss Basis
initial account balance
Profit Target (Phase 1)
10%
Profit Target (Phase 2)
5%
Min Trading Days
4 days
News Trading
restricted
Consistency Rule
No
FTMO's risk management requires adaptive position sizing across four critical scenarios. For standard trading days with normal volatility, maintain position sizes that risk no more than 1-2% per trade. On a $100K account, this means risking $1,000-$2,000 per position, well within the $5,000 daily limit. A $50K account allows $500-$1,000 risk per trade against the $2,500 daily threshold, while $25K accounts should risk $250-$500 per trade within the $1,250 limit.
News event days require extreme caution due to FTMO's news trading restrictions. Avoid trading 2 minutes before and after high-impact news releases. If holding positions through news, reduce size by 50% and ensure total portfolio risk doesn't exceed 1% of account value. Many traders underestimate volatility spikes during news, leading to rapid daily limit breaches.
Recovery after losing days demands psychological discipline. If you're down $2,000 on a $100K account, resist the urge to double position sizes. Your daily limit remains $5,000, but your risk tolerance should decrease to 0.5-1% per trade. The maximum drawdown rule means you're already $2,000 closer to the $10,000 total limit.
As you approach profit targets, protect gains while meeting minimum trading day requirements. In Phase 1, needing $2,000 to reach the 10% target on a $100K account, reduce risk to 0.5% per trade. Phase 2's 5% target ($5,000 on $100K) requires even more conservative sizing.
Here's a concrete failure scenario: A trader on a $50K FTMO account was up $800 by 2 PM, feeling confident. He spotted what seemed like a perfect EUR/USD setup and increased his usual 1% risk to 3% ($1,500). The trade moved against him, hitting his stop for a $1,500 loss. Frustrated and now down $700 for the day, he doubled down on the next trade, risking $2,000 on GBP/JPY. A sudden volatility spike caused slippage, resulting in a $2,300 loss. Total daily loss: $2,800, exceeding the $2,500 limit by $300. Account terminated.
The key is treating the daily limit as a circuit breaker, not a target. Most successful FTMO traders never lose more than 2-3% in a single day, leaving substantial buffer for unexpected market moves or execution issues.
Common Mistake to Avoid
The most common mistake causing FTMO failures is misunderstanding the daily loss reset mechanism combined with revenge trading. Traders often believe they get a "fresh" 5% each day regardless of their previous performance, but the daily limit calculates from the higher of starting balance OR starting equity at midnight CE(S)T. This means if you're down overall, your actual dollar limit decreases. For example, on a $100K account, if you're down $3,000 total (at $97K), your starting equity is $97K, so your daily limit is $4,850, not $5,000. Traders who don't grasp this often revenge trade after losing days, using the full perceived $5,000 limit when their actual limit is lower. They compound this by increasing position sizes to "make back" previous losses quickly, not realizing they're simultaneously approaching both the daily limit and the maximum 10% drawdown. This double-jeopardy scenario causes 60% of FTMO challenge failures, especially when combined with news trading violations or weekend gap exposure.