The FTMO (Funded Trader) challenge has become an increasingly popular way for aspiring day traders to access funding and prove their trading skills. However, it is well known that there is a high failure rate among traders attempting the evaluation. In this blog post, we will explore the FTMO challenge, look at what percentage of traders fail, analyze the reasons why so many are unsuccessful, and provide tips for overcoming the evaluation.
Is it hard to pass the FTMO challenge?
High failure rate
The FTMO challenge has a reputation for being extremely difficult to pass. Across FTMO's various account levels, it is estimated that only around 10% of traders are able to successfully complete the evaluation and become a funded trader. This means approximately 90% of those who attempt the challenge end up failing.
Strict rules
A major reason such a high percentage fail is because of the strict trading rules and conditions imposed during the evaluation. Traders must demonstrate solid risk management by avoiding margin calls, limiting drawdowns, and maintaining a positive profit target. These constraints can be very difficult to trade within successfully.
Psychological pressure
Additionally, the high-stakes nature of trading with real money during the evaluation adds immense psychological pressure. Knowing your funded account hangs in the balance can negatively impact decision making for many traders. Repeated losses can also drain confidence. This mental strain contributes to the high washout rate.
What is the risk percentage for FTMO?
10% account balance at risk
FTMO allows traders to risk up to 10% of the account balance allocated to them during the challenge. At higher account levels, this can enable substantial amounts of leverage for trading. However, with such risk comes the possibility of quickly encountering large losses and drawdowns that can fail the evaluation.
Difficult to recover from losses
The 10% maximum risk also means that any losses incurred eat into the profit target that must be reached to pass. Recovering from losing trades can be challenging when working with limited trading days and strict risk limits. This dynamic trips up many who take on excessive risk early in the challenge.
Forces risk management
While the 10% risk allowance can lead some traders to over-leverage, it also serves as an important risk management mechanism. Requiring positions to be sized appropriately forces traders to define and adhere to sound risk principles - a key practice for long-term trading success.
How many people fail FTMO?
Around 10% pass
According to FTMO statistics, only about 10% of traders are able to pass the funded account challenge at any account level. This means approximately 90% of aspiring funded traders fail the evaluation and are unable to gain access to the firm's capital.
Repeated attempts
Some portion of traders likely pass FTMO on a second, third or even fourth attempt. However, many traders surely give up after hitting the frustrating barrier of failure once or twice. Considering the high washout rate, the percentage who succeed even over repeated attempts is likely still small.
Varies by account level
While the overall average pass rate is only around 10%, there is some variation by account level. The pass rate is estimated to be slightly higher for the lowest $1,000 and $2,000 accounts compared to larger account levels. However, across the board, most traders find the challenge extremely hard to overcome.
Why Do 90% Of Traders Fail The FTMO Challenge?
Lack of experience
One of the biggest reasons so many fail is simply lack of experience. Trading requires refined skills built up over years of screen time. Yet many attempt FTMO with only minimal practice, often leading to rookie mistakes during the high-pressure challenge.
Emotional decisions
Inexperience also relates to psychological factors. Novices frequently struggle with emotions like fear and greed interfering in their decision-making. Letting emotions drive trades often produces poor results.
Overtrading & revenge trading
Additionally, beginners tend to overtrade by taking excessive positions too frequently. They also "revenge trade" to chase losses - practices almost sure to break FTMO rules.
Poor risk management
Crucial trading principles like appropriate position sizing, limiting risk of ruin, respecting stop losses, and managing total daily risk allow successful traders to survive inevitable losing streaks. Ignoring these tends to be fatal for passing FTMO evaluations.
Margin call breaches
Many undisciplined traders blow out FTMO accounts by committing too much at risk, facing margin calls, and violating account drawdown limits. Such risk management negligence almost always ends trader challenges.
Overtrading & overleveraging
Taking on too much leverage and volume is related to poor risk control. Traders press to capture more profits but disregard threat of overextending their accounts. Resulting margin calls force challenge failures.
The reason many people fail FTMO
Do not follow rules
A primary reason so many hopefuls fail to unlock a FTMO funded account comes down to simply not following the challenge rules. Carefully adhering to prescribed risk limits and trading parameters is essential for evaluative success.
Excessive risk-taking
Many traders fall into the trap of excessive risk-taking, likely tied to desperately wanting to hit profit targets. However, unchecked greed invariably results in rule breaches that cut short evaluation attempts.
Revenge & overtrading
Letting emotions like frustration and impatience drive "revenge trading" after losses or aggressively overtrading both often cause risk limit breaches. Lacking self-control ends most trader challenges.
Lack of screen time
Insufficient trading screen time and experience are also major causes of failure. No amount of theoretical knowledge replaces actual time spent actively trading - a factor many hopefuls overlook when attempting FTMO evaluations.
Poor planning & preparation
Even veteran traders can fail by not properly planning trading approach around FTMO rules. Thorough preparation aligned with challenge constraints is vital for navigating assessments successfully.
Rookie mistakes
Inexperience coupled with mistakes typical of rookie traders also implants the seeds of failure. Novices may frequently hit stop losses, overtrade, improperly size bets, and mismanage risks - almost sure to cut short challenges.
How many people pass funded account challenges?
While FTMO does not release detailed proprietary data on pass rates, some estimates based on reported numbers suggest:
5-15% pass rate
Across account levels, probably only around 5-15% of traders ultimately pass funded account evaluations at firms like FTMO and pass verification phases to trade with investor capital.
Higher at lower accounts
Pass rates may be slightly higher at lower account levels like the $1,000 and $10,000 tiers. This could result from lesser absolute profit targets required or differences in trader skill and risk appetite at varying tiers.
Lower at higher accounts
Pass rates likely decrease at larger account levels like $100k+, possibly connected to the sheer account size raising the difficulty level of keeping risk in check during evaluations. But regardless of tier, pass rates stay low.
Tips for overcoming the FTMO challenge
Slow & steady wins the race
Take a tortoise mentality to the FTMO challenge by steadily chipping away at profit targets through disciplined, calculated trading rather than aggressive, reckless approaches trying to quickly bank profits.
Start small
Consider starting evaluations at lower account tiers with smaller profit targets required, then scaling up account sizes with experience. Smaller accounts can allow better refinement of strategy.
Follow the rules
Rigorously follow all risk management rules, avoiding desperate decisions, controlling position sizing, limiting daily stop losses to avoid emotional reactions, and cutting losses early without hope trades.
Learn from losing trades
Thoroughly analyze all losing evaluative trades rather than glossing over mistakes. Identify exactly why trades failed and refine strategy to avoid repeating errors. Loss reflection breeds growth.
Review trade history
Continuously review entire FTMO trade history to analyze issues like overtrading frequency, improper entries and exits, positional sizing problems, and other strategic weaknesses addressed.
Simulate more before trading live
Take time to simulate strategy over an extensive number of trades using historical data. Thoroughly backtest approaches and refine them before applying strategies in funded account evaluations.
Strategies For Passing The FTMO Challenge
Start on a demo account
Practicing strategy adherence and money management principles on a demo account mirroring FTMO rules provides vital experience before attempting live funded evaluations.
Refine risk management
Demo trading permits refinement of proper risk management principles like maximum daily stop losses and optimal bet sizing until they become second nature when transitioned to live accounts.
Build consistency
Thorough demo rehearsal also allows development of consistency in executing planned trades and applying strategic principles - crucial for smoothly translating simulation success into funded account victories.
Specialize in a niche market
Trying to trade too many diverse markets often leads to undisciplined actions and diluted expertise. Specialize in specific sectors with deep understanding.
Master edge techniques
Focus intensive practice on mastering the technical and analytical edge techniques that best fit a target sector rather than jumping across unfamiliar markets. Depth beats breadth.
Gain intuition
Narrow focus also builds intuitive feel for usual price action patterns that aids quicker reaction to opportunities and changes. Such fluid expertise is key when trading under FTMO evaluation constraints.
Conclusion
In summary, the FTMO challenge sees only around a 10% passing rate, with approximately 90% of aspiring funded traders failing evaluations. Strict trading constraints coupled with psychological pressures contribute to low success levels. Key reasons traders fail relate to inexperience leading to poor decisions, lack of rigorous risk control, insufficient practice time, and simply not adhering to prescribed trading rules. Pass rates may fluctuate slightly across account tiers but universally stay low. Mastering prudent risk management, gaining extensive screen experience, thoroughly preparing, and incrementally scaling account sizes can help aspiring traders successfully overcome daunting FTMO odds to unlock a lucrative funded trading account.
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