FTMO and similar prop firms don't care if you bleed an account over a month — they care if you break a rule. And the rule traders break most is the daily loss limit, usually because they misunderstood how it's calculated. This guide fixes that.
Important
Prop firms update their terms regularly. This guide reflects the rules as published by FTMO at the time of writing — always confirm the percentages on your own FTMO dashboard before trading.
What is the FTMO daily loss limit?
The daily loss limit is the maximum your account balance or equity can drop in one trading day. If you cross it, the challenge ends on the spot — there's no warning and no second chance.
On the standard FTMO 2-Step challenge these are the numbers that matter:
- ◆ Phase 1 (evaluation): 10% daily loss, 10% maximum loss, 10% profit target.
- ◆ Phase 2 (verification): 5% daily loss, 5% maximum loss, 5% profit target.
- ◆ Minimum 4 trading days in each phase.
The 3-Step and Firm Funded programs use different (usually tighter) limits — the math below works identically, just swap the percentages.
How the daily loss is actually calculated
Here's the part that catches traders. FTMO calculates your reference point from the higher of two values:
- ◆ Your account balance at the start of the day (server-time midnight), or
- ◆ Your account equity at any moment during the day.
Your equity must never fall below that reference minus the daily loss percentage. Because the reference climbs with your equity, profitable equity actually raises your floor for the rest of the day. That's the trap.
Example 1 — a normal day
Your €100,000 Phase 1 account starts the day at €100,000 balance. Daily loss is 10%. Your reference is €100,000, so the floor is €90,000. As long as equity stays above €90,000, you're fine. If it touches €89,999 (or equity falls below €90,000 intraday on a trade), the challenge is over.
Example 2 — the profit trap
Mid-morning you're sitting on open winners and your equity hits €104,000. Your reference is no longer €100,000 — it's now €104,000 (the higher value). Your floor jumps to 90% of €104,000 = €93,600.
This is how challenges die
If the market reverses and your floating equity drops from €104,000 toward €93,600, you've lost only ~10% of today's value — but you're at the daily loss limit, even though your balance may still look healthy. Big intraday winners to huge drawdowns is the single most common failure mode.
Example 3 — the reset
The daily loss resets at server midnight. Suppose you ended the day at €98,000. Tomorrow morning your reference is €98,000, and the floor is €88,200. Note what this means: yesterday's damage doesn't reduce today's allowance — a fresh 10% budget starts every day. That's also why "revenge trading after a red day" isn't just psychology; it costs you a perfectly fresh daily allowance.
5 rules to never break the daily loss
- ◆ Write your floor before the first trade. Number on the screen or a whiteboard: today's reference and today's floor. If you don't know it, don't trade yet.
- ◆ Calculate off the higher of balance or equity. If you're in profit, your floor moved up. Recompute it whenever you have big floating winners.
- ◆ One trade should never hit the floor. If your maximum stop-loss distance can reach the daily limit, your position size is too big. Use a position size calculator before entering.
- ◆ Stop trading within 2% of the floor. Once you're within a couple of percent of the limit, the only reasonable trade is flat. The daily allowance resets tomorrow — live to use it.
- ◆ Trust the reset. A red day over, the budget resets at midnight. Do not carry yesterday's loss into today with a tilted mindset — that's how you blow the max (not just daily) loss.
Tracking it automatically beats a spreadsheet
The classic approach — a spreadsheet with "today's balance" and a formula — works for about a week. Then a floating profit moves your floor, you forget to update the reference, and one bad candle ends the challenge. Props aren't lost to bad math; they're lost to forgotten math.
CoreTrade's Prop Firm Mode does this for you: set your firm, account size, daily loss %, max drawdown and profit target once, then its dashboard shows live progress bars against your equity. You always know the floor that's moving under your feet — and your trade journal records every entry so the post-challenge review is a click away.
If you're comparing journals for a prop challenge, read the best trading journals of 2026 — and check why a spreadsheet eventually holds you back.
Frequently asked questions
What is the FTMO daily loss limit?
The FTMO daily loss limit is the maximum amount your account can lose in a single trading day. On the standard FTMO 2-Step challenge it's 10% in Phase 1 and 5% in Phase 2. Breaking it fails the challenge instantly.
How is the FTMO daily loss calculated?
FTMO uses the higher of two values as your reference: your account balance at the start of the day (server time midnight) or your equity at any moment during the day. Your equity must never fall below that reference minus the daily loss percentage.
Does the FTMO daily loss reset every day?
Yes. The daily loss limit resets at server time midnight. Each new day your reference point is recalculated from that day's starting balance — so a big loss yesterday doesn't carry into today's allowance.
What's the best way to track the FTMO daily loss limit?
Manually, many traders use a spreadsheet, but it's easy to misplace the reference value mid-day. A journal with a prop firm mode, like CoreTrade, tracks the daily loss limit, max drawdown and profit target automatically against your live equity.