Maximum Daily Loss

Before you can trade on a demo FTMO Account, 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 demo FTMO Account. Let’s take a look at the rule called Maximum Daily Loss.

Table of Contents

What is Maximum Daily Loss?

The Maximum Daily Loss Limit is a limit below which your equity cannot drop at any time. Equity includes open positions, commissions, and swaps. If your equity drops below this limit, the rule is considered violated.

How is the limit calculated?

For a 2-Step FTMO Challenge, the Maximum Daily Loss is set at 5% of the Initial Simulated Capital. The limit is recalculated every midnight CE(S)T using the following formula:

Account balance at midnight CE(S)T of the previous day – 5% of the Initial Simulated Capital

On the first day, the account balance used for the calculation is the Initial Simulated Capital.

This means that the Maximum Daily Loss limit can increase and decrease depending on the account balance recorded at midnight CE(S)T.

What is included in the calculation?

It is important to remember that the rule is based on equity, not only on closed results. This means the calculation includes both the results of closed positions and the floating P/L of open positions, as well as commissions and swaps.

Overnight positions require extra attention

If you hold positions overnight, be careful because the Maximum Daily Loss limit resets every midnight CE(S)T based on the account balance recorded at that time. This means that a position that was within the limit before midnight may exceed the limit after the reset if the floating loss is too large. Visit the Timezone Converter in the FTMO Client Area to see the exact reset time for your location.

Because the reset always happens at midnight CE(S)T, you should check when exactly this happens in your local time.

Example for a $200,000 account

Limit for Day 1:
Initial Simulated Capital = $200,000
Calculation = $200,000 – $10,000 = $190,000
Limit for Day 1 = $190,000

Limit for Day 2:
Balance at midnight CE(S)T between Day 1 and Day 2 = $204,000
Calculation = $204,000 – $10,000 = $194,000
Limit for Day 2 = $194,000

Limit for Day 3:
Balance at midnight CE(S)T between Day 2 and Day 3 = $202,000
Calculation = $202,000 – $10,000 = $192,000
Limit for Day 3 = $192,000