The FTMO Challenge is a two-phase paid evaluation operated by FTMO (Prague-based, founded 2015) that traders must pass to access a funded account. Phase 1 ("Challenge") requires hitting a 10% profit target within 30 days without breaching a 5% daily drawdown or 10% total drawdown. Phase 2 ("Verification") requires 5% profit within 60 days under the same drawdown rules. Pass both and you receive a funded account with an 80/20 profit split (trader keeps 80%), scalable up to $2,000,000.
The model has been copied — with minor tweaks — by FundedNext, The5%ers, MyForexFunds successors, FundingPips, and dozens of others. When traders say "the challenge," they almost always mean an FTMO-style evaluation.
Worked example
A $100,000 FTMO Challenge costs roughly $540. To pass Phase 1 you need $10,000 of profit without your daily equity dropping more than $5,000 below the day's start, and without total equity ever falling more than $10,000 below the starting balance. Pass Phase 1 and you immediately enter Phase 2 with a $5,000 target. Pass Phase 2 and you become a funded trader.
Why it matters
The challenge is the gatekeeper. Most aspiring funded traders never pass — published pass rates hover around 10%. Understanding the exact rule set (consistency rule, weekend holding, news trading, max position size) is the difference between a payout and a closed account. See drawdown rule for the precise math.
Common pitfalls
- Aiming for the 10% target in a few trades. Oversized risk usually triggers daily drawdown before the target hits.
- Forgetting that floating losses count toward daily drawdown — not just closed losses.
- Holding trades over the weekend or through high-impact news when the firm prohibits it.
- Refunding fee misunderstandings: FTMO refunds the challenge fee with the first payout, not on passing.