Maximum Daily Loss

Before you can trade for FTMO, we need to see how you can manage risk. Because of this, we have developed Trading Objectives. There are four basic Trading Objectives you need to know to become an FTMO Trader and to trade up to $200,000 on your FTMO Account. The second rule is called Maximum Daily Loss.

The Maximum Daily Loss is one of the most important Trading Objectives. We have developed this rule so that traders can become experienced risk managers with habits of professional traders. We could call this trading objective “trader’s daily stop-loss”. For a Normal risk account type, the limit is set at 5%, for the Aggressive risk type, the limit is increased to 10% of the initial balance.

Let’s take the Normal risk account with the 5% limit as an example. If you have a $200,000 FTMO Account, you must never exceed the total equity loss of $10,000 in one day. That means if you had a losing streak and the total loss would result in -$8,000  in one trading day, your permitted loss for the rest of the day would be $2,000 before exceeding the limit. Bear in mind that the Maximum Daily Loss works with your equity, and therefore both floating losses and your closed positions are included in the calculation. The limit is inclusive of commissions and swaps.

Be careful, as the Maximum Daily Loss resets at midnight CE(S)T! Let’s say you had a great start to the week and your Monday trading session resulted in a closed profit of $4,000. Your Maximum permitted Loss for the rest of the day is now at $14,000. If you would now open a new trade which would go into a $13,000 floating loss, then up until 11:59 PM, you would be still staying within the limit, because, as mentioned previously, your permitted loss for the rest of the day is $14,000.

However, the Maximum Daily Loss resets at midnight CE(S)T, so at 12 AM on Tuesday your permitted loss is by default reset to $10,000. If you would still be carrying the $13,000 floating loss, you would exceed the limit as the profits made the previous day no longer count in a new day.

The Maximum Daily Loss resets at midnight CE(S)T, which means you should use the FTMO timezone converter to check when exactly the Maximum Daily Loss resets in your local time. For example in Tokyo time, which is at GMT+9, the Maximum Daily Loss limit will reset exactly at 7 AM Tokyo time.

The Maximum Daily Loss is a rule that is beneficial to both FTMO and traders, because it clearly defines risk for the company and gives all traders plenty of room to trade with a reasonably adjusted risk.