Leverage is capped at a reasonable level, usually around 1:100 or less. Borrowing too much money to trade bigger lot sizes may seem tempting but will only increase your risk of hitting an MDL or MDD. Stick to the allowed leverage.
You've been trading for a while and feel like you've got the hang of it. Your strategy is solid, your risk management is tight, and you're consistently profitable. Now you're ready to take it to the next level - you want to trade for a prop firm. The big question is, can you pass their challenge?
Prop firm challenges like FTMO are no joke. Thousands of traders apply but only a small percentage make it through. The good news is, with the right preparation and mindset, you can absolutely crush an FTMO challenge. You just need to go in with a plan, focus on the rules, and trade your edge.
In this guide, we'll give you the inside scoop on everything you need to know to pass an FTMO challenge on your first try. You'll get tips from traders who have been through the process, learn strategies to optimize your performance, and find out how to avoid the common mistakes that get so many traders eliminated. By the end, you'll be ready to sign up for your challenge with the confidence to succeed. Your only question will be why you didn't do this sooner!
Understand the FTMO Challenge Rules and Format
To pass an FTMO challenge, you need to thoroughly understand the rules and format. FTMO challenges typically last 10-15 trading days. During this time, you’ll need to grow an account by a certain percentage, like 10%, while following strict risk management rules.
The first key rule is the maximum daily loss, or MDL. This limits how much your account balance can decrease in a single day. If you hit the MDL, your challenge is over. Make sure you understand how much risk you can take on each trade to avoid this.
You’ll also have a maximum drawdown, or MDD, which is the maximum percentage your account balance can decrease from the highest point. Stay well below the MDD at all times. One good losing streak could knock you out of the challenge if you’re not careful.
Leverage is capped at a reasonable level, usually around 1:100 or less. Borrowing too much money to trade bigger lot sizes may seem tempting but will only increase your risk of hitting an MDL or MDD. Stick to the allowed leverage.
Finally, certain trading strategies like hedging, scalping and using EAs are prohibited. Only trade in a straightforward manner using a tested strategy that complies with FTMO’s rules.
If you can grow the account by following all the risk parameters successfully, you’ll pass the challenge and gain access to the funded account! The key is starting small, using proper risk management, and avoiding the urge to gamble for quick profits. Stay disciplined, focus on consistent gains, and you can join the ranks of funded FTMO traders.
The FTMO Evaluation and Verification Phases
The first phase to passing an FTMO challenge is the evaluation period. This typically lasts 10 to 15 days. During this time, you need to show FTMO you have what it takes to trade their account successfully. To do this, you'll have to outperform a benchmark and meet certain risk metrics.
Specifically, you'll have to generate a minimum 5% return while keeping your max drawdown under 10% of the initial account balance. You'll also need to follow proper risk management by not exceeding the maximum position size of 5 lots for every $100,000 in the account. Staying within these parameters shows you trade in a controlled manner.
If you pass the evaluation, you move onto the verification phase which usually lasts around 30 days. The rules are the same here, outperform the benchmark and follow the risk rules. The only difference is the targets are a bit higher, requiring a 10% return and max 15% drawdown.
A few tips for passing both phases:
- Focus on high probability trades. Look for obvious opportunities and trending markets.
- Keep position sizes small, around 1-3% of the account. This allows room for losses while still generating good returns.
- Set a stop loss on every trade to control your risk. Place stops just beyond key support or resistance levels.
- Only trade when high-impact news events are over. The markets are most volatile around news releases, so avoid trading then.
- Review your performance regularly. Make sure you're meeting the targets and adjust your strategy if needed. The key is consistency.
If you follow these tips, remain disciplined, and show you can profitably trade an account over an extended period, you'll pass your FTMO challenge with flying colors. Stay focused and keep your eyes on the prize - a funded trading account!
Key Requirements to Pass the FTMO Challenge
To pass the FTMO challenge, you’ll need to meet some key requirements. First, you must trade a minimum of 10 lots (1 standard lot = 100,000 units) over the course of the challenge. That works out to about 1-2 trades per day. Stick to major currency pairs with good liquidity like EUR/USD, GBP/USD, and USD/JPY to ensure your trades are filled easily.
You’ll also need to maintain a maximum drawdown of less than 10%. This means managing your risk carefully and not risking more than 1% of your account on any single trade. Keep your stop losses tight, around 20-30 pips for most trades.
Most importantly, you need to demonstrate solid trading performance. Aim for a profit of at least 10% over the course of the challenge. To achieve this, focus on trades with a high probability of success.
If you follow these tips, maintain strict risk management, and show consistent profitability, you'll pass the FTMO challenge in no time and be on your way to funding your forex trading account. Stay disciplined and keep putting in the effort – you've got this!
Risk Management Tips for the FTMO Challenge
To pass an FTMO challenge, effective risk management is key. Here are some tips to keep in mind:
- Define Your Risk Parameters: Decide how much you're willing to risk per trade and how much you can afford to lose overall before the challenge ends. Set hard stops for each trade and stick to them. It's best to risk no more than 1% of your account balance per trade.
- Use Tight Stop Losses: Place your stop loss orders close to your entry point, around 5 to 10 pips away for most trades. This limits your losses if the market moves against you. Tight stops also allow you to take more trades since your risk is lower.
- Diversify Your Trades: Don't put all your eggs in one basket. Diversify across currency pairs, time frames, and trading strategies. That way, if one trade goes bad, it won't blow your whole account. Aim for 10 to 15 trades minimum to provide enough diversification.
- Manage Your Leverage Wisely: While high leverage allows you to magnify your gains, it also magnifies your losses. Use leverage of no more than 1:50 to 1:100 for most currency pairs. Higher leverage means higher risk, so only use it if you have experience.
- Review and Learn: Carefully review each of your losing trades. Try to determine what went wrong so you can avoid making the same mistakes again. Losing is part of trading, so view each loss as an opportunity to improve your skills. With practice and persistence, your risk management abilities will strengthen.
Following these risk management best practices will put you in the best position to pass your FTMO challenge on the first try. Keep your risks small, use tight stops, diversify your trades, manage leverage properly and learn from your losing trades. If you can master these, you'll be well on your way to becoming an FTMO trader.
Funding Account: What to Expect if You Pass
If you pass the FTMO challenge, congrats! You now have access to a sizable funding account to trade with. Here’s what you can expect:
- A generous allocation of funds. FTMO allocates $100,000 for you to trade with, though you can apply for more once you’ve proven yourself. This gives you a lot of flexibility and room for solid risk management.
- Strict risk parameters. FTMO aims for consistent growth, so they enforce a maximum daily loss limit of $5,000 and a max drawdown of 10% ($10,000). Go over either of these and your account will be suspended. It’s critical you respect these limits and trade carefully.
- Regular evaluations. Even after passing the challenge, FTMO monitors your progress and trading closely. You need to pass a weekly evaluation where your account balance must be higher than the initial allocation. Fall below two weeks in a row and your account is terminated.
- Generous profit splits. If you trade well and pass the evaluations, FTMO takes only a 20% cut of your profits. The more you earn, the more you keep. This can be an extremely lucrative arrangement if you’re a skilled trader.
- Opportunity to become an FTMO trader. If you continue performing well for 6-12 months, you may be invited to become an official FTMO trader. This provides an even higher funding amount and more flexibility. The potential to turn prop firm trading into a full-time job.
Mindset Shifts Needed to Pass a Prop Firm Challenge
To pass a prop firm challenge, you need to make some important mindset shifts. These mental adjustments will help you approach the process with the right perspective and give you the best chance of success.
- Embrace the Pressure: Prop firm challenges are high pressure by design. There will be unrealistic deadlines, scrutiny of your every trade, and the knowledge that one wrong move could end your challenge. The only way through is to accept the pressure and use it to your advantage. Take a deep breath and focus on the task in front of you. Stay disciplined in following your trading plan and try not to overthink things. Pressure can either paralyze you or motivate you—choose the latter.
- Learn From Your Mistakes: You will make mistakes during your challenge. Everyone does. The key is to not dwell on them or let them shake your confidence. Review what went wrong, understand why it happened, and determine what you can improve for next time. Then move on. Don't take mistakes personally—see them as an opportunity to grow as a trader. Prop firms want to see how you handle adversity, so show them you can learn from your losses.
- Focus on the Process, Not the Outcome: It's easy to become obsessed with passing the challenge, but that mindset can work against you. Focus instead on following your trading plan, managing risk, and executing your strategies well. Take it one trade and one day at a time. If you trade consistently according to your method, the outcome will take care of itself. Stay focused on what you can control—the process. The result will reflect the work you put in.
- Believe in Your Ability: You have the skills and knowledge to pass this challenge—that's why you were selected in the first place. Trust in the abilities and preparation that got you to this point. Avoid self-doubt and negative self-talk. You are capable, you are ready, and you will succeed as long as you trade with confidence and commitment. Believe in yourself and your trading edge.
With the right mindset, passing a prop firm challenge is very achievable. Stay focused, learn from your experiences, and believe in your ability to cross the finish line. You've got this! Now go and crush that challenge.
Conclusion
So there you have it, with the right mindset and preparation you absolutely can pass an FTMO challenge. Focus on sticking to your trading plan, managing risk, and keeping emotions in check. Do your homework to find the best prop firm that fits your style and needs. While the process may seem daunting, if you follow the tips in this guide you'll be well on your way to funded trading success. Stay determined and don't get discouraged. You've got this! Keep putting in the work each day and before you know it you'll be trading with the backing of a prop firm. Now get out there, practice your strategies, build your confidence, and crush that FTMO challenge. The opportunity of a lifetime is waiting for you.
