The Maximum Loss Limit is a limit below which equity cannot drop at any time.
If the equity drops below the limit, the rule is considered violated.
How is the Maximum Loss Limit calculated?
The Maximum Loss Limit is recalculated every midnight CE(S)T as the difference between:
- the highest account balance achieved at the end of any preceding trading day or, if higher, the Initial Simulated Capital, and
- the Maximum Loss Amount.
The Maximum Loss Amount is 10% of the Initial Simulated Capital.
The limit can only increase, but never decrease. Intraday changes resulting from open positions do not affect the Maximum Loss Limit.
Where does this rule apply?
This rule applies to the FTMO Challenge: 1-Step as well as the FTMO Account: 1-Step.
Example (Initial Simulated Capital: $100,000)
Limit for Day 1
- Initial Simulated Capital = $100,000
- Calculation = $100,000 − $10,000 = $90,000
- Limit for Day 1 = $90,000
Limit for Day 2
- Balance at midnight CE(S)T between Day 1 and Day 2 = $104,000
- Calculation = $104,000 − $10,000 = $94,000
- Limit for Day 2 = $94,000
Limit for Day 3
- Balance at midnight CE(S)T between Day 2 and Day 3 = $103,000
- Calculation = $104,000 − $10,000 = $94,000
(Because the closing balance between Day 1 and Day 2 is higher than between Day 2 and Day 3, that higher balance is used for the limit calculation.)
- Limit for Day 3 = $94,000
