FTMO Challenge Rules 2026: The Complete EA Trader's Compliance Guide

Phase 1: Profit Target and Timing Rules

FTMO Phase 1 is the first evaluation stage every trader must complete before progressing to Phase 2. The objective is clear on paper: generate a 10% profit on your account balance within the evaluation period. In practice, the surrounding rules shape how that 10% must be achieved, and those constraints matter significantly for how you configure a prop firm ea.

The maximum duration for Phase 1 is 30 calendar days. There is no minimum number of calendar days you must trade, but there is a minimum number of trading days: 4. A trading day counts only if you open and close at least 1 position on that day. You cannot hold a position overnight on Sunday and have Monday count unless you take an additional trade on Monday itself. For EA traders, this rule is typically a non-issue because a properly configured algorithm trading multiple sessions will generate far more than 4 active trading days over any 30-day evaluation window.

The 10% profit target is calculated on the initial account balance, not an equity high-water mark. On a $100,000 account, you need to reach $110,000 in balance (closed profits), not in floating equity. Unrealized profits on open positions at the end of the evaluation do not count toward the target unless those positions are closed. Quality prop firm EAs are built to close positions before the evaluation deadline to ensure profits are realized and counted.

FTMO does not restrict which instruments you trade in Phase 1, beyond the general instrument availability on their platform. You can trade forex majors, minors, and exotics, indices, commodities, and cryptocurrencies. The EA should be configured for instruments it is optimized for rather than chasing volatility in unfamiliar markets to hit the profit target faster.

Leverage in Phase 1

FTMO offers leverage up to 1:100 on most forex pairs, 1:50 on indices, and 1:10 on cryptocurrencies. However, leverage is not a free variable. Using maximum leverage dramatically increases the risk of hitting the daily loss limit or maximum drawdown rule before reaching the profit target. The best-performing prop firm EAs use effective leverage far below the maximum - typically 1:5 to 1:20 on forex positions - specifically because consistent evaluation success requires avoiding drawdown rules, not maximizing position size.

Phase 2: What Changes and What Stays

Phase 2 is a continuation of the evaluation with a lower profit target and a longer time window. The profit target drops from 10% to 5%. The maximum duration extends from 30 to 60 calendar days. The minimum trading days requirement remains 4. Crucially, the drawdown rules remain identical to Phase 1: 10% maximum overall drawdown, 5% maximum daily loss.

The lower profit target in Phase 2 is not an invitation to trade more aggressively. The drawdown limits are unchanged, meaning a single bad trading day that breaches the 5% daily loss limit will end Phase 2 just as abruptly as Phase 1. The purpose of Phase 2 is to demonstrate consistency over a longer sample of trading. A good prop firm ea does not change its behavior between Phase 1 and Phase 2 because the underlying risk parameters are calibrated to stay well within the drawdown limits at all times.

One practical implication for EA traders: because Phase 2 allows 60 days to hit a 5% target, there is no time pressure that would justify accepting worse risk parameters. The EA should simply run its standard strategy and the lower target will be reached well within the time window through normal operation. Traders who fail Phase 2 almost always fail due to drawdown violations, not due to running out of time.

After completing both phases successfully, FTMO issues a funded account within 1 to 3 business days following verification. The initial funded account carries a standard 80% profit split, which can be increased through their scaling program. If you used the same EA through both evaluation phases, you can continue running it on the funded account using the same settings, though the funded account has one additional rule not present during evaluation - covered in the funded phase section below.

Drawdown Rules: The Most Commonly Violated Limits

The 2 drawdown rules are the most commonly violated rules across all FTMO evaluation attempts, and they are the rules that quality prop firm EAs are most precisely engineered to respect. Understanding both rules in exact detail is essential before configuring any EA for an FTMO challenge.

Maximum Overall Drawdown (10%)

The maximum overall drawdown rule at FTMO is measured from your initial balance, not from your equity peak. On a $100,000 account, your account balance and equity must never fall below $90,000. This is a static rule: the floor is fixed at $90,000 regardless of how high your account grows during the evaluation.

This matters because it is more forgiving in one direction than many traders realize. If you grow your account to $107,000 in balance, you do not then have a 10% drawdown floor at $96,300. You still have a floor at $90,000. The maximum loss you can sustain before violation is still $17,000 from your current position. This gives well-run strategies meaningful room even after significant gains.

The rule is measured in real time on your equity, not just your closed balance. An open position that moves against you and pushes your equity below $90,000 is a violation, even if you never close the trade at that equity level. EAs that use proper stop-loss placement prevent this by ensuring the maximum possible drawdown from any open set of positions cannot reach the floor.

Maximum Daily Loss (5%)

The maximum daily loss rule is where most traders fail. At FTMO, daily loss is measured from the balance at the start of the trading day (midnight Central European Time). On a $100,000 account at the start of the day, you cannot lose more than $5,000 - whether through closed trades, open floating losses, or any combination - on that calendar day.

The critical subtlety: if your account grows to $104,000 in balance before the next midnight reset, tomorrow's daily limit is 5% of $104,000, which is $5,200. The daily limit scales with your balance, unlike the overall drawdown which is fixed from the initial balance. For an EA running consistent small trades, this scaling effect actually provides more protection as the account grows.

A quality ea to pass prop firm challenge calculates the current day's running loss in real time and stops opening new positions when the daily drawdown approaches a safe threshold - typically 3 to 4% - to ensure that normal trade volatility and spread costs cannot push the account past the 5% daily limit. This circuit breaker behavior is one of the clearest differentiators between EA-assisted and manual evaluation attempts.

Restricted Trading Practices

FTMO explicitly prohibits several trading behaviors regardless of profitability. These apply to both evaluations and funded accounts. Violating them can result in account termination and forfeiture of profits even if all numerical limits were respected.

Holding Positions Over Weekends

FTMO does not prohibit weekend holding, but they flag it as the trader's risk. Positions held over the weekend gap at market open Monday with no ability to set stop orders that will be respected during the closure period. Quality prop firm EAs typically include a setting to automatically close all positions before market close on Friday at a configurable time - usually 22:00 to 22:30 CET - specifically to avoid weekend gap risk.

Arbitrage and Latency Exploitation

FTMO explicitly prohibits any form of arbitrage, including latency arbitrage, price feed arbitrage, and reverse arbitrage between connected brokers. This rule targets algorithms that exploit pricing inefficiencies between FTMO's quotes and other feed sources rather than generating profit through legitimate market analysis. Standard directional EAs optimized for trend following or range trading do not use any arbitrage logic and are fully compliant with this rule by design.

Group Trading and Account Pooling

Coordinating trades across multiple accounts in a way that creates a combined risk position - or sharing a single account among multiple traders - violates FTMO's group trading prohibition. Running the same EA independently on multiple accounts you personally own and funded is not group trading. FTMO clarified this explicitly in their April 2026 FAQ update. The key distinction is that each account must operate independently with no cross-account position coordination.

News Trading Restrictions

FTMO's position on news trading is more nuanced than most traders expect. The official rules do not ban news trading outright. What they prohibit specifically is holding positions open through major scheduled news events. The distinction is between trading around news (analyzing post-release momentum and entering after the announcement) versus holding an existing position through the announcement window and benefiting from the directional spike.

The practical rule FTMO enforces: no open positions within a defined window around high-impact scheduled events - typically 2 minutes before and after NFP, FOMC decisions, and similar tier-1 releases. Some EA configurations extend this window to 5 minutes before and after as a margin of safety. FTMO can and does review accounts that show consistent profits specifically correlated with news spike moments, and accounts using obvious news exploitation strategies risk being flagged regardless of technical compliance.

A well-configured prop firm passing ea handles this through an integrated news filter that connects to an economic calendar API, identifies upcoming high-impact events, and automatically closes or pauses all positions and new order placement during the restricted window. This is one of the features that meaningfully separates quality prop firm EAs from generic forex robots not designed for evaluation compliance.

Rules That Only Apply on Funded Accounts

One significant rule applies to FTMO funded accounts that does not exist during the evaluation: the consistency rule. On a funded account, no single trading day's realized profit can exceed 50% of your total cumulative profits for the current billing period.

Concretely: if you have made $3,000 in closed profits over the first 2 weeks of a funded period, no single day in that period can show more than $1,500 in realized profits. If a trading day produces $2,000 in closed profits, FTMO will review the account for consistency compliance. Accounts that systematically rely on a single massive winning day to generate their profits are at risk of having that period's profits withheld.

For most EA strategies running small consistent trades across many sessions, this rule is naturally satisfied because no single day typically generates an outsized share of monthly profits. However, EAs using less frequent but larger position sizes should have this rule explicitly configured as a daily profit ceiling to prevent accidental violations on unusually strong trading days.

Scaling on Funded Accounts

FTMO's standard scaling plan works as follows: after 4 months of funded trading where at least 10% profit was generated in each period with no rule violations, the account is eligible for a 25% increase in capital. The profit split also increases from 80% to 90% at the first scaling milestone. From April 2026, traders who hit 8% or more in funded month 1 qualify for accelerated scaling to 110% of account size rather than waiting for the standard quarterly review.

EA-Specific Compliance Considerations

Running an EA on FTMO requires attention to a few compliance points that differ from manual trading. The first is VPS stability. FTMO's platform measures drawdown and daily loss in real time. An EA running on a personal computer that loses internet connection may leave positions open without active monitoring, and if the market moves against those positions while the EA is disconnected, the drawdown rules will still be enforced. A stable VPS in a London or Amsterdam data center eliminates this risk entirely.

The second consideration is spread management. FTMO uses its own liquidity provider, and spreads widen significantly during high-impact news events and during the low-liquidity Asian session on minor pairs. EAs that enter positions when spreads are wide face immediate floating losses from the spread cost before the trade has a chance to move in the right direction. Spread filters - which pause entries when the current spread exceeds a configurable threshold - prevent this and meaningfully improve the realized performance of any EA running on FTMO's conditions.

Third, FTMO monitors for prohibited practices using automated analysis of trade patterns. An EA that systematically enters positions at very precise moments relative to candle open or close times in patterns that resemble tick scalping may attract compliance review even if it produces steady results. Quality ea to pass prop firm challenge platforms are built to operate in ways that are unambiguously compliant with FTMO's approach to legitimate trading strategies, avoiding patterns that could appear to exploit platform-specific pricing inefficiencies.

Finally, the account leverage setting should be confirmed before starting the EA. FTMO allows traders to request a leverage change after account creation, but the EA must be configured to use position sizes consistent with the actual leverage on the account. An EA configured for 1:100 leverage running on an account set to 1:30 will open positions far smaller than intended. Confirm the leverage setting in FTMO's client area and configure the EA accordingly before starting the evaluation.

Common Violations and How EAs Prevent Them

The data from thousands of FTMO evaluation attempts reveals a clear pattern in why traders fail. Daily loss limit violations account for the majority of failed evaluations - roughly 58% of all failures according to FTMO's own published statistics. The overall drawdown violation accounts for another 22%. Combined, drawdown violations cause 80% of all evaluation failures. This tells you exactly where to focus compliance attention and exactly why automated drawdown management is the most important feature of any forex robot.

Violation 1: Revenge Trading After Losses

This is purely a human behavior that an EA eliminates entirely. After several losing trades, manual traders often increase position size to recover losses faster, which accelerates the risk of hitting the daily loss limit. An EA executes the same position size on every trade regardless of prior results. There is no emotional response to drawdown - just consistent, rules-based execution.

Violation 2: Holding Losing Positions Through News

A common pattern in failed manual evaluations: a trader holds a losing position hoping for a reversal, then a major news announcement moves the market sharply against them, triggering the daily loss limit in minutes. An EA with a news filter closes all positions before the announcement window and cannot be persuaded by hope or confidence to hold through the event.

Violation 3: Overtrading on the Final Evaluation Day

When manual traders approach the deadline without reaching the profit target, they often start taking larger or more frequent trades to force the result. This is one of the highest-risk behaviors in prop firm trading. A good EA does not have a concept of urgency relative to deadlines. It executes its strategy at the same pace on day 29 of a 30-day evaluation as on day 1. If the strategy has not reached the target by day 29, the EA does not change its approach - it continues the same execution that produced results on every other day.

For traders who want a deeper look at how drawdown limits apply across different prop firms - not just FTMO - see our guide on prop firm drawdown rules explained. For the technical setup required before starting any evaluation, see our complete EA installation guide.