Understanding the FTMO Challenge: A Complete Overview
In today’s fast-evolving Forex world, traders are no longer limited by their account size. Thanks to proprietary trading firms like FTMO Challenge, skilled traders can manage significant capital without risking personal funds.
However, succeeding in the FTMO Challenge isn’t just about strategy—it’s about discipline, consistency, and understanding the firm’s unique rules. In this 2025 guide, we’ll break down how the FTMO system works, what you need to pass it, and why thousands of traders choose FTMO as their trusted funding partner.
Moreover, by learning how to align your strategy with FTMO Challenge evaluation model, you can maximize your chances of success and start earning from a funded account sooner than you think.
What Is FTMO?
FTMO is a proprietary trading firm based in Prague, Czech Republic, founded in 2015. It provides traders with the opportunity to manage virtual trading accounts and earn real monetary rewards once they pass a structured evaluation process.
In simple terms, FTMO acts like a talent-scouting firm for traders. Essentially, it identifies skilled individuals by testing their trading consistency and risk management through two distinct stages — the Challenge and the Verification phase.
During the first stage, you must demonstrate disciplined trading while staying within the firm’s risk limits. After that, if you successfully meet all the targets, you move on to the Verification phase, which further confirms your reliability and consistency.
Once both stages are passed, you receive a funded FTMO Account, allowing you to trade using the company’s capital. As a result, you can earn substantial profits without risking your own money, keeping up to 90% of the returns.
Therefore, FTMO provides traders with a realistic, structured, and risk-free opportunity to showcase their skills. In other words, it helps ambitious traders scale up faster while maintaining full control over risk and professional discipline.
Use of Hedging in the FTMO Challenge
In simple terms, hedging in trading means opening two opposite positions on the same or correlated currency pairs to reduce potential losses during volatile market conditions.
For example, you might open both a buy and sell position on EUR/USD to balance exposure and minimize drawdown.
When it comes to FTMO, however, hedging is allowed but only within certain guidelines. According to FTMO’s trading rules, traders can use hedging strategies as long as they respect daily loss and overall drawdown limits.
In other words, you can hedge your trades to protect your capital, but not to bypass risk restrictions or manipulate account equity.
How FTMO Works (Step-by-Step Process)
FTMO operates on a two-step evaluation model that ensures traders are disciplined, skilled, and risk-aware. Let’s go through it step by step.
1. The FTMO Challenge
This is the first phase of the evaluation. Your goal is to achieve a 10% profit target while staying within strict risk limits:
- Maximum Daily Loss: 5%
- Maximum Total Loss: 10%
- Minimum Trading Days: 4
There’s no time limit, which means you can focus on trading patiently and strategically. However, you must follow these rules precisely to move forward.
👉 Example:
If your account balance is $100,000, your maximum daily loss is $5,000, and your total loss limit is $10,000. Exceeding either rule—even once—results in instant disqualification.
2. Verification Stage
After successfully completing the Challenge, you then move on to the Verification phase. At this stage, the profit target is reduced to just 5%, while the risk limits remain exactly the same. In essence, this phase is designed to confirm your trading consistency and discipline under nearly identical market conditions.
Moreover, Verification serves as a final test to prove that your earlier success wasn’t based on luck, but rather on a repeatable and sustainable trading approach.
Once both phases are passed successfully, you’ll officially receive your FTMO Account. From that point onward, you can start trading live (virtually) and, as a result, earn real profits based directly on your performance.
Ultimately, this process ensures that only skilled, disciplined, and consistent traders gain access to FTMO’s funded capital.
3. Funded FTMO Account
Now, you’re trading FTMO’s capital—not your own. You can earn up to 90% profit split and withdraw your profits every 14 to 30 days. Additionally, FTMO refunds your initial challenge fee with your first payout.
In essence, FTMO rewards consistency and smart risk-taking rather than gambling or overtrading.
Types of FTMO Accounts
FTMO caters to different trading styles, offering two main account options.
🟢 1. FTMO Account (Day Trading)
- Leverage: up to 1:100
- Restrictions: No holding trades overnight or over weekends.
- Best For: Day traders who prefer short-term setups and fast market action.
🟣 2. FTMO Swing Account
- Leverage: up to 1:30
- Benefits: Allows holding trades overnight, over weekends, and during major news events.
- Best For: Swing and position traders who hold trades longer for larger moves.
Therefore, choosing the right account type depends entirely on your trading style and schedule.
Benefits of Joining FTMO
Becoming an FTMO trader comes with several valuable advantages.
✅ 1. Trade Large Capital Without Risk
You can trade accounts worth $100,000+ without risking personal funds.
✅ 2. Earn Real Profits
Even though trades are simulated, FTMO pays real profits—up to 90% of what you earn.
✅ 3. Structured Evaluation
The clear and transparent two-step process ensures fairness and credibility.
✅ 4. Refundable Fee
Once funded, FTMO returns your challenge fee on your first payout—essentially making participation risk-free.
✅ 5. Strong Community & Tools
FTMO offers performance-tracking tools like Account Metrix and the FTMO Mentor App, helping traders stay consistent and emotionally balanced.
In addition, FTMO’s transparency and global recognition make it one of the most trusted names in the prop trading industry.
Drawbacks / Limitations of FTMO Challenge
While FTMO is an incredible opportunity, it’s not without challenges.
❌ 1. Strict Rules: A single mistake like exceeding the daily loss can end your evaluation.
❌ 2. Emotional Pressure: The structured nature of the Challenge can trigger overtrading or revenge trading.
❌ 3. No Real Capital in Testing: Although profits are real, the Challenge and Verification phases are simulated.
❌ 4. Lower Leverage for Swing Accounts: Reduced leverage (1:30) can limit position sizing for swing traders.
However, with solid discipline and a strong plan, these limitations can be managed effectively.
When to Take the FTMO Challenge
The FTMO Challenge is best suited for traders who:
- Have at least 6 months of consistent trading results.
- Understand risk management and position sizing.
- Can maintain emotional discipline under pressure.
- Are ready to trade professionally and scale their career.
Moreover, beginners should first practice on demo accounts or smaller challenges to build confidence before attempting the full FTMO evaluation.
Common Mistakes to Avoid
Even talented traders fail the Challenge due to common errors. Here’s what to watch out for:
- Overleveraging: Using excessive lot sizes to hit profit targets quickly.
- Ignoring Daily Loss Limits: One bad trade can end the entire evaluation.
- Revenge Trading: Trying to recover losses impulsively after a losing streak.
- Skipping Risk Management: Always stick to a fixed percentage (1–2%) risk per trade.
- Trading During Emotions: Take breaks after big wins or losses to stay objective.
Furthermore, journaling every trade helps identify emotional triggers and improve decision-making over time.
FAQs – FTMO Challenge 2025
Q1: Is the FTMO Challenge worth it?
Absolutely. FTMO provides a structured, risk-free path to professional funding and long-term growth.
Q2: Can I use EAs or bots during the Challenge?
Yes, as long as they follow FTMO’s trading rules and aren’t based on arbitrage or latency exploitation.
Q3: What happens if I fail the Challenge?
You can reapply anytime. FTMO offers discounts and flexible retry options for failed attempts.
Q4: How long does it take to get funded?
Typically, traders complete both phases in 4–8 weeks, depending on their schedule and consistency.
Q5: Does FTMO refund the Challenge fee?
Yes, your Challenge fee is refunded after your first profit payout as a funded trader.
Final Thoughts
In conclusion, the FTMO Challenge is one of the best opportunities for traders to scale up without risking their own money. By following a disciplined, step-by-step plan, you can meet the profit targets while maintaining risk control and emotional balance.
Moreover, FTMO’s fairness, transparent rules, and generous payout system make it a top choice among prop firms in 2025. Whether you’re a day trader or a swing trader, FTMO gives you the tools, capital, and environment to trade like a professional.
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