FTMO splits across two evaluation paths (1-Step and 2-Step) with rules that differ meaningfully — 3% vs 5% daily loss, 10% trailing vs 10% static max loss, and a 50% Best Day rule on Funded payouts. Full rule breakdown in my FTMO rules guide, or read my complete FTMO review. Sign up at FTMO or check the Help Center.
FTMO's max loss rule has one architecture but two completely different implementations depending on which evaluation path you choose. On the 1-Step Challenge, the max loss is a 10% trailing limit: the floor rises end-of-day each time the account closes at a new high, locking in a higher minimum balance that can never come back down. On the 2-Step Challenge, the max loss is a 10% static limit: the floor is set at 90% of the initial account balance on day one and stays there for the life of the evaluation, regardless of how much the account grows. Both paths apply a 10% max loss by the numbers. In practice, they create entirely different risk environments.
This is the single biggest mechanical difference between FTMO's two evaluation paths and the one that most directly shapes which traders each path fits. Paul has scalped the 1-Step Challenge on $50K and $100K Standard accounts for roughly four years, with $15K+ in real payouts across multiple FTMO accounts. The trailing floor is not an abstraction in that experience; it is the mechanic that compresses the scalping buffer session after session on a good run and the one that has required the most careful equity management compared to any other FTMO rule. The notes below break down exactly how each model works, walk through the math at both account sizes, and put the two models against each other and against how peers like The5ers, FundingPips, and FundedNext handle the same rule.
What is FTMO's max loss rule?
The FTMO max loss rule is a hard equity floor below which the account is breached and the evaluation ends. It applies throughout the challenge and the funded FTMO Account stage. The floor is expressed as a percentage of a balance reference point, and it is 10% across all account sizes and both evaluation paths.
The critical variable is which balance that 10% references and whether that reference changes over time. On the 1-Step Challenge, the reference tracks the highest daily closing balance reached and moves up whenever a new high is set. On the 2-Step Challenge, the reference is fixed to the initial account balance at the moment the account is opened and never changes.
Both versions include floating P&L in the equity calculation in real time. An open position that is losing counts toward the floor immediately. The daily loss limit and the max loss are separate but parallel rules; it is possible to breach the max loss intraday on a bad position even if the daily loss limit has not been reached, and vice versa.
The max loss applies to both Standard and Swing variant accounts. The variant choice determines news-trading and overnight-hold permissions, not the max loss structure. See the FTMO accounts overview for full variant details.
How does the 1-Step trailing 10% max work?
The 1-Step Challenge max loss starts at 90% of the opening balance. On a $100,000 account that is $90,000. On day one, there is a $10,000 buffer between the initial balance and the breach level.
The trailing mechanism works as follows. At the end of each trading day (00:00 CE(S)T), FTMO compares the current day's closing equity to the highest closing equity the account has recorded so far. If today's close set a new high, the floor moves up by the same dollar amount. If today's close did not set a new high, the floor stays where it was. The floor only moves up; it never moves back down.
Example: the account opens at $100,000 with a $90,000 floor. After three profitable days the account closes at $105,000. The floor has now moved to $95,000 (10% below the new high of $105,000). The trader still has a $10,000 buffer in dollar terms, but that buffer is now locked at a higher level. If the account subsequently drops from $105,000 back to $94,500, the floor at $95,000 triggers a breach. The same drop from $100,000 would have still left $4,500 of room on the original floor.
The reset condition matters for funded traders. Each time a reward payout is processed on the funded FTMO Account, the trailing reference resets from the post-payout balance. That means a trader who withdraws profits regularly effectively restarts the trailing clock at a lower reference, creating fresh room before the next payout cycle.
The 1-Step Challenge also applies the Best Day Rule on top of the trailing max loss. No single profitable day can account for more than 50% of total profitable days' combined profit at the time a payout is requested. That rule does not auto-breach the account, but it does require the trader to add more profitable trading days before any payout review if the percentage is too concentrated. For a full breakdown of that mechanic see the FTMO rules overview.
How does the 2-Step static 10% max work?
The 2-Step Challenge max loss is set at account opening and does not move. On a $100,000 account the floor is $90,000 on day one and is still $90,000 if the account reaches $130,000. The buffer in dollar terms actually grows as the account grows: a $130,000 balance sits $40,000 above a $90,000 floor, compared to $10,000 of room at the start.
This is the key structural advantage of the static model for position traders who hold trades for larger moves. The ability to grow the account without tightening the floor allows the trader to carry more nominal drawdown in live positions without approaching the breach level, which is directly useful when running positions overnight or over the weekend on Swing variant accounts.
The 2-Step Challenge uses the same 10% static max loss in both Phase 1 and Phase 2. The daily loss limit on both phases is 5% of the initial balance, more lenient than the 3% daily loss on the 1-Step. That combination of a wider daily limit and a fixed floor gives 2-Step traders more room to absorb single-session volatility and more room to let the account grow before the max loss becomes a real concern. Full Phase 1 and Phase 2 mechanics are covered in the FTMO 2-Step Challenge guide.
Why is trailing harder?
The trailing model sounds fair: the floor rises with the account, and the percentage buffer never shrinks. In percentage terms that is technically correct. In practice for a scalper, the experience is the opposite of comfortable.
A scalper on the $100K 1-Step path who strings together a run of sessions and grows the account from $100,000 to $112,000 has moved the floor from $90,000 to approximately $100,800. The buffer in dollar terms is still around $11,000 on paper. But the floor is now $100,800 on an account that opened at $100,000. A reversion to the original starting equity now sits below the floor. The scalper cannot absorb a full round-trip back to the starting point. Every new high locks in that vulnerability permanently.
Position traders generate fewer distinct daily closing highs per unit of time. A swing trader who holds a position for a week might record only one or two new account highs during that period, moving the floor modestly. A scalper who closes at a new high every other session can ratchet the floor significantly in a month. That structural difference between trade frequency and floor movement is why the 1-Step trailing model fits certain styles better than others, and why Paul's scalping approach on the 1-Step requires tighter equity management than most traders running the 2-Step expect.
The second compounding factor is the daily loss limit differential. The 1-Step daily loss is 3% vs the 2-Step's 5%. A scalper running multiple positions during volatile sessions has less intraday buffer on the 1-Step before hitting the daily line. When the daily loss and the trailing floor are both tighter, a single bad session carries more risk of ending the evaluation on two simultaneous pressure points.
What's the math at $50K and $100K?
The table below traces an example account for both paths across a five-day run of profitable sessions followed by a two-day drawdown. The starting balance is $100,000; the $50,000 versions follow the same ratios but at half scale.
$100,000 account — 1-Step trailing vs 2-Step static over 7 days
| Day | Close Balance | 1-Step Floor | 1-Step Buffer | 2-Step Floor | 2-Step Buffer |
|---|---|---|---|---|---|
| Start | $100,000 | $90,000 | $10,000 | $90,000 | $10,000 |
| Day 1 | $102,500 | $92,250 | $10,250 | $90,000 | $12,500 |
| Day 2 | $105,000 | $94,500 | $10,500 | $90,000 | $15,000 |
| Day 3 | $107,500 | $96,750 | $10,750 | $90,000 | $17,500 |
| Day 4 | $110,000 | $99,000 | $11,000 | $90,000 | $20,000 |
| Day 5 | $112,000 | $100,800 | $11,200 | $90,000 | $22,000 |
| Day 6 | $105,000 | $100,800 | $4,200 | $90,000 | $15,000 |
| Day 7 | $101,500 | $100,800 | $700 | $90,000 | $11,500 |
By Day 7, after the account retraces from $112,000 to $101,500, the 1-Step trader has $700 of buffer left. Seven hundred dollars on a $100K account. A single bad scalp session ends the evaluation. The 2-Step trader still has $11,500 of buffer on the same two-day drawdown because the floor never moved from $90,000.
At $50,000 the numbers halve: the 1-Step floor after a $56,000 peak sits at $50,400. An account at $50,750 would have $350 of buffer. The 2-Step floor stays at $45,000 throughout.
This is the math Paul encounters when scalping the 1-Step on $50K and $100K. The good-run problem is real: a streak of profitable sessions that should feel safe actually compresses the survival margin down to a level where any meaningful losing day becomes existential.
How does Funded max loss differ?
The funded FTMO Account inherits the max loss rule from the evaluation path. A 1-Step graduate carries the trailing 10% model; a 2-Step graduate carries the static 10% model. The mechanics do not change at transition.
What changes is the reset condition. During evaluation, the trailing reference only moves up and can only reset by the account reaching the funded stage (which resets nothing automatically) or by purchasing a new evaluation. On the funded FTMO Account, each payout withdrawal resets the trailing reference from the post-payout balance. A trader who withdraws after every profitable cycle effectively restarts the trailing clock at a lower reference point, creating fresh buffer before the next cycle.
For funded 1-Step scalpers this means payout cadence becomes part of risk management. Waiting to accumulate a large payout at a very high peak balance creates a trailing floor that could be dangerously close to the post-payout balance. Withdrawing more regularly at lower peak levels keeps the floor further from the working balance. The bi-weekly payout cycle at FTMO pairs with this logic: regular short cycles keep the reset cadence healthy. Payout mechanics including the 8-hour average processing time and the Scaling Plan are covered in detail in the FTMO payout rules guide.
How do peers compare?
Most prop firms in the Forex and CFD space default to a static max loss. Trailing models are less common, and when they appear they differ in exactly how and when the floor moves.
The5ers runs an end-of-day trailing drawdown on its Black Arrow path that functions similarly to FTMO's 1-Step model. The floor rises with daily highs and locks in. Traders comparing The5ers to FTMO's 1-Step are essentially comparing two trailing models with slightly different target and daily loss specifications.
FundingPips uses a static max loss on its evaluation paths. The floor is fixed at a percentage of the initial account balance and does not trail, placing FundingPips in the same mechanical category as FTMO's 2-Step.
FundedNext uses a static max loss on its Stellar 2-Step path. Paul has tested FundedNext extensively including the Stellar products and the static floor structure matches the 2-Step dynamic: the buffer widens as the account grows rather than compressing with every new high.
E8 Markets uses a static max loss. The firm's 3-asset structure (Forex, Futures, Crypto) means the same rule applies across asset classes, where FTMO restricts to Forex and CFDs only.
The comparison table below summarizes the max loss model across key peers:
| Firm | Max Loss Type | Percentage | Notes |
|---|---|---|---|
| FTMO 1-Step | Trailing EOD | 10% | Floor rises with daily high balance |
| FTMO 2-Step | Static | 10% | Fixed at 90% of initial balance |
| The5ers Black Arrow | Trailing EOD | Varies by plan | Similar mechanism to FTMO 1-Step |
| FundingPips | Static | 8% (varies) | Fixed from initial balance |
| FundedNext Stellar 2-Step | Static | 10% | Fixed from initial balance |
| E8 Markets | Static | 8% | Fixed from initial balance |
Traders who find the trailing model operationally difficult on FTMO's 1-Step should consider the FTMO 2-Step Challenge before defaulting to a competitor. The 2-Step is FTMO's own static model, costs less in many cases, and still leads to the same funded FTMO Account with the same payouts. The tradeoff is a two-phase evaluation and a lower base profit split of 80% rather than 90% from day one.
The FTMO vs The5ers comparison covers the trailing vs trailing contrast in detail for traders evaluating both paths. For position traders who want a static max loss with Futures access rather than Forex/CFDs, the E8 Markets review is the more relevant alternative.
The bottom line
The FTMO max loss rule comes in two versions that share a percentage but operate as completely different risk environments. The 1-Step trailing 10% max loss tightens the buffer on every successful session and makes sustained profitable runs mechanically dangerous for scalpers. The 2-Step static 10% max loss does the opposite: the better the account performs, the more room accumulates between the balance and the floor.
Paul scalps the 1-Step on $50K and $100K and the trailing floor is the rule that requires the most deliberate management of the four years he has run FTMO accounts. That is not an argument against the 1-Step: the 90% profit split from day one and the shorter evaluation timeline are genuine advantages. It is an argument for understanding the trailing mechanic before you commit to a path, especially if your strategy generates frequent new balance highs.
The FTMO 2-Step is not a consolation prize. For position traders, swing traders, and anyone who intends to hold overnight or over weekends on the Swing variant, the static floor is structurally better suited to the way those strategies generate drawdown. The evaluation is longer and the initial profit split is lower, but the max loss model gives the account room to breathe in a way that the trailing model explicitly does not.
Check the FTMO accounts overview for the full decision framework across both paths, the FTMO strategy guide for trading styles that work within each max loss model, and the FTMO FAQ for more rule-specific questions.
Frequently Asked Questions
What is FTMO's max loss rule?
FTMO applies a 10% max loss limit on both evaluation paths, but the two implementations are structurally different. On the 1-Step Challenge the limit is trailing: the floor rises end-of-day as the closing balance grows, locking in a higher minimum every time the account sets a new high. On the 2-Step Challenge the limit is static: the floor sits at 90% of the initial account balance and never moves regardless of account growth. Both apply in real time including floating open positions and carry through from the evaluation to the funded FTMO Account stage.
How does the FTMO 1-Step trailing max loss work?
The 1-Step trailing max loss starts at 90% of the initial balance (10% below opening) and moves up end-of-day whenever the previous day's closing balance exceeds the prior reference high. The floor can only move up. Once locked, it never drops back down. The result is a buffer that stays at 10% of the current peak in percentage terms but translates to a tighter operating environment after a run of profitable sessions because the floor has followed the balance higher. The reset condition is a payout withdrawal on the funded stage, which restarts the trailing reference from the post-payout balance.
How does the FTMO 2-Step static max loss work?
The 2-Step static max loss is set once at account opening as 10% below the initial balance. On a $100,000 account the floor is $90,000 on day one and remains $90,000 whether the account grows to $115,000 or $130,000. The buffer in dollar terms grows with the account. A 2-Step trader who grows a $100,000 account to $130,000 has $40,000 of nominal room above the $90,000 floor. The same trader on the 1-Step path has a floor near $117,000 after that same growth, leaving only $13,000 of room.
Why is trailing harder?
Every new daily equity high on the 1-Step Challenge locks in a higher floor permanently. A scalper who runs the account from $100,000 to $112,000 over five sessions now has a floor near $100,800. A two-day drawdown back to $101,500 leaves $700 of buffer. The equivalent scenario on the 2-Step would leave $11,500 of buffer on the same closing balance because the floor never left $90,000. The compounding effect intensifies with scalping frequency: more sessions, more new highs, more floor ratcheting. The daily loss limit on the 1-Step is also 3% compared to 5% on the 2-Step, so both pressure points are tighter simultaneously.
What's the math at $50K and $100K?
At $100,000: the 10% buffer equals $10,000. After a run to $112,000 the 1-Step floor is at $100,800 and the buffer is $11,200. A retracement to $101,500 leaves $700 of room. At $50,000: the 10% buffer equals $5,000. After a proportional run to $56,000 the floor is at $50,400 and a retracement to $50,750 leaves $350 of room. The 2-Step floor at both sizes stays at $90,000 or $45,000 respectively throughout the same trajectory, with buffer growing at every new high instead of staying fixed.
How does funded max loss differ?
The funded FTMO Account inherits the same max loss rule as the evaluation path used to qualify. A 1-Step graduate carries the trailing model; a 2-Step graduate carries the static model. The key funded-stage difference is the reset condition: payout withdrawals on the funded account reset the trailing reference from the post-payout balance, giving 1-Step traders a mechanism to periodically restart the trailing clock. Regular shorter payouts keep the reference lower; infrequent large payouts at peak balances leave a high trailing floor to navigate in the next cycle.
How do FTMO peers compare on max loss?
Most Forex/CFD prop firms use a static max loss. The5ers applies an end-of-day trailing model on specific plans, making it the closest structural peer to FTMO's 1-Step. FundingPips, FundedNext, and E8 Markets all use static max loss models fixed at the initial account balance, placing them in the same category as FTMO's 2-Step. Traders who want a trailing model for any reason other than the FTMO 1-Step have limited options in the prop space; most alternatives are static by design.
Can I choose between trailing and static at FTMO?
Yes, by choosing your evaluation path. The 1-Step Challenge carries the trailing model; the 2-Step Challenge carries the static model. Both Standard and Swing variants on each path inherit the max loss model of the parent path. Once purchased, the max loss type is locked for that account. The choice is structural: it cannot be changed mid-evaluation or on transition to the funded stage.
Does the trailing max loss reset between evaluation and funded stage?
The transition from evaluation to funded does not automatically reset the trailing reference. The floor carries forward from the final evaluation balance. On a 1-Step evaluation where the account ends at $108,000, the funded account starts with a floor near $97,200, not $90,000. The reset only occurs when a reward payout is processed on the funded stage. Traders who pass the 1-Step evaluation with a high peak balance should account for this elevated floor before placing the first funded trade.
Does floating P&L count toward the max loss floor?
Yes. FTMO calculates max loss against real-time equity, which includes open floating positions. A position that is losing but not yet closed moves the equity reading toward the floor immediately. This is particularly relevant for position traders holding large unrealized drawdowns overnight and for scalpers during periods of high intraday volatility where a position moves sharply against before recovering. The max loss breach is triggered by equity touching the floor, not by closed balance.
Which account types use which max loss model?
Every 1-Step Challenge account (Standard variant only; there is no 1-Step Swing) uses the trailing 10% max loss. Every 2-Step Challenge account (both Standard and Swing variants) uses the static 10% max loss. The FTMO Account funded stage inherits the model of the challenge that produced it. Account sizes ($10K, $25K, $50K, $100K, $200K) do not affect which model applies; only the path choice determines whether trailing or static governs the account.
What trading styles suit each max loss model?
Scalpers and high-frequency day traders who close all positions daily and build balance in small increments find the trailing model hardest because each profitable close can lock in a higher floor before the next session. Position traders and swing traders generate fewer distinct daily closing highs per unit of time, slowing the trailing floor's ascent and making the 1-Step more workable for that style. The 2-Step static model is genuinely better suited to swing and position-trading strategies where the wider daily loss limit (5% vs 3%) and the non-moving floor combine to give the strategy room to play out over multiple sessions without compressing the buffer.