FTMO vs The5ers Drawdown Rules: A 2026 Trader's Guide

What Are the Differences Between FTMO and The5ers Drawdown Rules?

As of October 2026, FTMO 2-Step and The5ers High Stakes both specify a 5% daily loss limit and a 10% maximum loss, but their daily loss calculations use different reference points. FTMO 1-Step has a 3% daily loss limit and a separate trailing maximum-loss rule. The right comparison depends on the exact program, how it calculates equity and when its loss limits update.

Introduction: Why Drawdown Rules Matter Before You Choose a Prop Firm

A trading strategy can be profitable over time and still lose an evaluation if one position pushes account equity below a firm's drawdown limit. The challenge is that FTMO vs The5ers drawdown rules are not just a comparison of percentages: the calculation method, daily reset and treatment of open positions can change the amount of room a trader has.

This guide explains the rules in practical terms. It compares FTMO's 2-Step Challenge with The5ers High Stakes as the main comparison, then covers FTMO 1-Step separately because its loss limits work differently.

You will learn how daily loss and maximum loss are calculated, what happens when balance and equity diverge, how to interpret a $100,000 example and which questions to ask before purchasing an evaluation.

Research note: The percentages and formulas in this article are based on the firms' official public rules checked on October 25, 2026. Program terms can change, so verify the rules for the exact account you intend to purchase.

1. What Is the Difference Between Daily Loss and Maximum Drawdown?

Daily loss and maximum loss are two separate limits. A daily loss rule restricts how far account equity can fall relative to a daily reference point. A maximum-loss rule sets a broader boundary for the account. A trader can comply with one limit and still breach the other.

For example, a trader might stay within the daily loss allowance but gradually lose enough across several sessions to breach the maximum-loss limit. Conversely, a sharp intraday loss might break the daily limit before the account reaches its overall maximum-loss boundary.

How does a daily loss limit work?

A daily loss limit defines the lowest equity level an account may reach during the applicable trading day. The firm calculates this level using its own formula, which may refer to the initial simulated capital, the balance at a daily reset or another specified reference.

For FTMO 2-Step, the daily loss amount is 5% of initial simulated capital. The firm recalculates the limit at 00:00 Central European Time, using the account balance recorded at that reset and subtracting the daily loss amount.

The5ers High Stakes also specifies a 5% daily loss limit, but it uses the higher of the previous day's closing balance or equity as the reference. The calculation takes place at 00:00 server time.

These differences matter after a profitable day or when a position remains open at the daily rollover. The daily limit is not necessarily a fixed dollar figure that can be applied without checking the current reference.

What is the difference between static and trailing drawdown?

Static drawdown means the maximum-loss boundary remains fixed relative to the initial account balance. For example, a static 10% maximum-loss rule on a $100,000 account sets the overall boundary at $90,000.

Trailing drawdown means the boundary can rise as the account's balance reaches higher levels. The precise trigger varies by program. A trailing limit may be calculated from end-of-day balances or update in real time when closed trades establish a new balance high.

These methods should not be treated as interchangeable. FTMO 2-Step and The5ers High Stakes both specify a static 10% overall maximum loss. FTMO 1-Step uses a trailing overall-loss limit that updates in real time when a closed trade sets a new balance high.

A trailing limit does not necessarily fall when the account loses money. Under FTMO 1-Step, the maximum-loss limit can rise but not decrease. This means a profitable closed trade can change the minimum equity level the account must maintain.

Related guide: Prop Firm Drawdown Types Explained: Static vs Trailing vs Balance-Based (2026 Guide)

2. How Are FTMO and The5ers Daily Loss Limits Calculated?

The key difference is the reference used to calculate the daily boundary. FTMO 2-Step subtracts a daily loss amount equal to 5% of initial simulated capital from the balance recorded at the daily reset. The5ers High Stakes calculates its 5% daily allowance using whichever is higher: the previous day's closing balance or equity.

How does The5ers High Stakes calculate daily drawdown?

The5ers High Stakes specifies a 5% daily drawdown limit and a 10% maximum loss from the initial balance. Its daily calculation uses the higher of the previous day's closing balance or equity at 00:00 server time.

In simple terms, the daily calculation follows four steps:

1. ●Identify the account balance at the daily reference time.
2. ●Identify the account equity at the same reference point.
3. ●Use whichever value is higher.
4. ●Calculate 5% of that reference value and subtract it to determine the daily loss boundary.

Consider a hypothetical $100,000 account. If the relevant reference value is $100,000, 5% equals $5,000, making the illustrative daily boundary $95,000.

The boundary can be higher after a profitable day. The5ers' official example explains that if a $100,000 account has equity of $110,000 just before rollover, the new daily loss amount is $5,500. The resulting daily boundary is $104,500.

This is why traders should not assume that the daily limit always resets to $95,000 on a $100,000 account. The relevant balance and equity snapshot matters.

If a position remains open across the daily reset, its floating profit or loss can affect equity. The rule also specifies using the higher value between balance and equity, so an open losing position does not automatically mean the lower equity figure becomes the reference.

Official source: The5ers High Stakes drawdown rule

How does FTMO 2-Step calculate daily drawdown?

FTMO 2-Step sets its maximum daily loss amount at 5% of initial simulated capital. At 00:00 Central European Time, the firm uses the balance recorded at the reset and subtracts that daily loss amount.

For a $100,000 account, the calculation is:

• ●Initial simulated capital: $100,000.
• ●Maximum daily loss amount: 5%, or $5,000.
• ●Balance at the first day's reference point: $100,000.
• ●First-day daily loss boundary: $95,000.

Suppose the balance at the next daily reset is $102,000. The daily loss amount remains $5,000 because it is based on the initial simulated capital. The new daily boundary becomes $97,000.

If the balance at the following reset is $101,000, the daily boundary becomes $96,000.

The amount of daily loss allowed is therefore still calculated from the initial capital, but the boundary changes with the balance recorded at the daily reset.

FTMO defines equity as the balance plus open-position profit or loss, adjusted for swaps and commissions. If equity drops below the applicable daily boundary, the rule is breached.

What happens when the daily loss limit resets?

A daily reset does not erase the account's entire trading history or restore the overall maximum-loss allowance. It recalculates the daily boundary according to the specific program's formula.

This distinction is important after a profitable day. The next day's starting reference may be higher, which can also raise the daily boundary. The overall maximum-loss rule remains separate.

Traders should confirm the firm's time zone and reset convention rather than assuming that the day changes at local midnight. The5ers refers to server time, while FTMO specifies 00:00 CE(S)T for its daily calculations.

3. FTMO vs The5ers Drawdown Rules: What Do the Numbers Show?

As of October 25, 2026, FTMO 2-Step and The5ers High Stakes both specify a 5% daily loss limit and a 10% static maximum loss. Their daily reference calculations differ. FTMO 1-Step uses a 3% daily loss amount and a trailing overall maximum-loss rule, so its figures should be evaluated separately.

How do the main drawdown rules compare?

Table 1: FTMO vs The5ers drawdown rules, as of 2026.

Sources: Official FTMO Trading Objectives, FTMO 2-Step Challenge rules and The5ers High Stakes drawdown rules. Verify the current program terms before purchase.

The table shows why comparing only the percentages can be misleading. Two programs can both advertise a 10% maximum loss while applying different mechanics to the daily limit. A third program may have the same 10% figure but a trailing boundary that changes as the account grows.

What does a 5% daily loss and 10% maximum loss mean on a $100,000 account?

A percentage is easier to understand when converted into a currency amount. For an account with $100,000 in initial simulated capital, the basic figures are:

• ●3% daily loss amount: $3,000.
• ●5% daily loss amount: $5,000.
• ●10% maximum loss amount: $10,000.

These are loss amounts, not universal statements about the live equity boundary. The formula determines where the boundary sits at a given moment.

Table 2: Illustrative loss amounts for different account sizes, as of 2026.

These are mathematical examples based on initial account size. They are not a substitute for each firm's live daily-limit calculation, and they do not imply that every account size is available under every program.

For FTMO 2-Step, the daily loss amount is based on 5% of initial simulated capital. The maximum-loss boundary is 10% below that initial capital.

For The5ers High Stakes, the overall maximum loss is 10% of the initial balance, but the daily reference can reflect a higher previous closing balance or equity.

For FTMO 1-Step, the daily loss amount is 3% of initial simulated capital, while the overall maximum-loss limit can move upward as closed trades set new balance highs.

How can a profitable day affect the next day's loss limit?

Suppose a $100,000 FTMO 2-Step account closes the day with a balance of $102,000. At the next reset, its daily loss boundary is $97,000: the $102,000 reference balance minus the $5,000 daily loss amount.

For a The5ers High Stakes account, the daily reference uses the higher of the previous day's closing balance or equity. If that higher reference is $102,000, 5% equals $5,100, making the illustrative daily boundary $96,900.

The two boundaries differ because the calculation methods differ. These examples assume the stated figures are the relevant reference values and exclude any additional complications that might arise from live account conditions.

A trader should repeat the calculation for the actual account rather than copying a number from a general comparison article.

How does FTMO 1-Step's trailing maximum loss work?

FTMO 1-Step uses a 10% maximum-loss amount, but the boundary is not static. The firm recalculates it in real time using the highest account balance reached from closed positions, or the initial simulated capital if that is higher, minus 10% of initial simulated capital.

For a hypothetical $50,000 account:

• ●The initial maximum-loss boundary is $45,000.
• ●If a closed trade raises the balance to $50,600, the boundary rises to $45,600.
• ●If a later closed trade leaves the balance at $50,300, the boundary remains $45,600 because the previous $50,600 balance high is still the reference.

The limit can rise, but it does not fall simply because the balance later declines. Equity must remain above the applicable boundary.

This is a meaningful difference from FTMO 2-Step and The5ers High Stakes, where the overall maximum-loss limit is static relative to the initial capital. Anyone comparing FTMO 1-Step with another program should understand this mechanism before choosing.

Official source: FTMO Trading Objectives

4. What Happens When Balance and Equity Differ?

A prop firm's drawdown rule can be breached even when the closed-trade balance appears acceptable. Equity reflects the account's current value, including open-position profit or loss and, where specified, adjustments for swaps and commissions.

This is important because unrealised losses can push equity below a limit before a trade is closed.

Can floating losses breach a prop firm's drawdown limit?

Yes. Where a drawdown rule is based on equity, floating losses on open trades count toward the live account value used to test the limit.

Consider a simplified example:

• ●Account balance: $98,000.
• ●Floating loss on open positions: $2,000.
• ●Equity before other costs: $96,000.
• ●Applicable drawdown boundary: $96,500.

The balance remains $98,000, but equity is $96,000. If the rule requires equity to remain above $96,500, the account has crossed the boundary.

The example is illustrative. Actual equity can also reflect commissions, swaps and other account adjustments specified by the platform or firm's rules.

This is why traders should monitor equity rather than relying only on closed-trade profit and loss. A position that is still open can affect rule compliance even if the trader expects the market to reverse.

What happens if an account briefly crosses the loss boundary?

Under the official rules described by FTMO and The5ers, reaching or crossing the applicable limit can result in a breach and account termination. Traders should not assume that a temporary breach will be forgiven because the position later recovers.

Practical safeguards include:

• ●Check equity against the current boundary, not just the balance.
• ●Leave a buffer rather than targeting the full permitted loss.
• ●Account for spreads, commissions, swaps and possible slippage.
• ●Avoid position sizes that require every trade to behave as expected.
• ●Check whether positions will remain open across a daily reset.
• ●Recalculate the boundary when the program's reference value changes.

These practices cannot guarantee that an account will avoid a breach. They can, however, help traders understand how much room remains before a formal rule is violated.

Do commissions and swaps count toward drawdown?

FTMO's official Trading Objectives define equity using balance plus open-position profit or loss, adjusted for swaps and commissions. Traders should therefore include those costs when monitoring the account's equity.

For The5ers, consult the current rules and account interface for the relevant program's exact calculation. Do not assume that all firms or programs use identical formulas merely because they display the same maximum-loss percentage.

5. Which Drawdown Rules Create More Risk for Traders?

Neither firm is automatically easier or safer for every trader. The practical effect of a drawdown model depends on the trader's position sizing, holding period, typical volatility, frequency of trading and ability to manage losses before they approach the limit.

A rule that feels manageable to a trader who closes positions quickly may be harder for someone who regularly holds positions through volatile periods. The percentage alone does not reveal that difference.

Is static drawdown easier to manage than trailing drawdown?

Static drawdown can be simpler to plan around because the overall boundary remains fixed relative to initial capital. A trader can calculate the starting boundary and understand that the overall loss limit does not move upward as the account grows.

Trailing drawdown requires additional attention. As the account reaches higher balance levels, the maximum-loss boundary can rise. A later decline may then breach the rule even if the account remains above its original starting balance.

For example, under FTMO 1-Step, a $50,000 account begins with a $45,000 maximum-loss boundary. If a closed trade raises the balance to $52,000, the trailing boundary becomes $47,000. A subsequent decline to $46,900 would fall below that boundary, even though the account remains above its initial $50,000 balance in neither equity nor balance terms? The key test is the live equity relative to the $47,000 limit, not whether the trader remembers the original starting figure.

This is why traders should evaluate how a boundary moves, when it updates and which balance or equity value triggers the change.

How can traders reduce the chance of a drawdown breach?

A risk-management plan should account for the firm's formal limit and a separate personal stop. The personal stop should generally be more conservative than the maximum permitted loss, leaving room for normal market movement and trading costs.

Useful steps include:

1. ●Calculate the boundary before trading. Confirm the current daily and overall loss limits for the exact program.
2. ●Choose a personal loss threshold. Avoid treating the firm's maximum as a target for how much to lose.
3. ●Size positions before entry. Estimate the amount that could be lost if the trade reaches its stop.
4. ●Consider correlated positions. Several positions exposed to the same market move can create more combined risk than their individual sizes suggest.
5. ●Include floating losses. Monitor equity while trades are open.
6. ●Check the reset time. Recalculate the daily boundary after the applicable rollover.
7. ●Reduce risk after a difficult session. Avoid attempting to recover a loss by increasing position size.
8. ●Keep a written rule sheet. Record the daily limit, maximum-loss boundary, reset time and personal stop for the account.

Table 3: A practical drawdown checklist, as of 2026.

No checklist can eliminate trading risk. Its purpose is to make the limits easier to monitor and reduce avoidable mistakes.

Related read: Prop Firm Risk Management Rules Compared: Max Daily Loss vs Overall Drawdown Explained

6. Should You Choose FTMO or The5ers Based on Drawdown Rules?

The most useful starting point is to compare programs with similar structures, then assess their calculation methods. FTMO 2-Step and The5ers High Stakes both specify a 5% daily loss limit and a 10% static maximum loss. FTMO 1-Step should be considered separately because it has a 3% daily loss amount and a trailing overall-loss limit.

The best fit depends on whether the account rules align with the way a trader manages risk. No drawdown model guarantees a successful evaluation or makes a strategy profitable.

Which program may suit your risk-management approach?

Consider the following questions:

• ●Do you prefer a static overall-loss boundary? Compare FTMO 2-Step with The5ers High Stakes. Both use a static 10% overall maximum-loss limit, but their daily loss reference calculations differ.
• ●Are you considering FTMO 1-Step? Understand its 3% daily loss amount and its real-time trailing maximum-loss limit before choosing.
• ●Do you regularly hold positions overnight? Review the program's trading-hour, news and holding rules as well as its drawdown formula.
• ●Do your trades experience large floating losses? Check how equity is calculated and how much buffer remains before the daily or overall boundary.
• ●Do you rely on increasing position size after profitable sessions? Understand how higher reference balances can affect the next daily boundary or a trailing overall-loss limit.
• ●Do you trade around major economic announcements? Review the firm's current news-trading rules. Drawdown limits are only one part of the full rule set.

The5ers High Stakes may be worth considering for traders who want a two-step evaluation with a static overall maximum-loss limit and who understand its daily reference calculation. FTMO 2-Step has a similar static overall-loss structure, while FTMO 1-Step provides a different risk profile because its overall boundary trails upward.

These are descriptions of rule structures, not a claim that one firm is universally better. The outcome depends on how the trader's strategy and risk controls fit the program's terms.

Related read: The5ers High Stakes New vs Classic Review

What should you check before purchasing a challenge?

Before paying for any evaluation, use this checklist:

1. ●Confirm the exact program name and account size.
2. ●Read the official daily loss formula.
3. ●Read the official maximum-loss formula.
4. ●Check whether the program uses balance, equity or both.
5. ●Confirm the daily reset time and time zone.
6. ●Calculate the boundaries using a realistic example from your intended account size.
7. ●Check news, overnight and weekend trading rules.
8. ●Review the evaluation and funded-account terms separately.
9. ●Understand any additional consistency, minimum-day or payout conditions.
10. ●Recheck the terms on the official website before purchasing.

This process is more reliable than choosing a firm based only on a headline percentage or a third-party comparison table. If a rule is unclear, seek clarification from the firm's official support before making a purchase.

Related read: The5ers: From Evaluation to Funded Trader, What Changes After You Pass (2026)

8. Key Takeaways

• ●FTMO 2-Step and The5ers High Stakes both specify a 5% daily loss limit and a 10% static maximum loss, but their daily calculations use different reference points.
• ●FTMO 1-Step is different: it has a 3% daily loss amount and a trailing overall maximum-loss limit that can rise in real time after a closed trade establishes a new balance high.
• ●Equity matters. Open-position losses and, where included in the formula, commissions and swaps can affect compliance.
• ●A percentage is not the whole rule. The reference balance, reset time and limit-update method determine the actual boundary.
• ●Static and trailing drawdown should not be treated as interchangeable. Understand the calculation before deciding which model fits your approach.
• ●Verify official terms before purchase. Rules can change, and the conditions for one program should not be assumed to apply to another.

7. A Practical Next Step

Before choosing a challenge, compare the official drawdown rules for the exact account model you plan to use. Start with FTMO's Trading Objectives and The5ers' High Stakes rules, then calculate the daily and overall boundaries for your intended account size and position sizes.

• ●The5ers official High Stakes page
• ●FTMO Trading Objectives

For more prop firm comparisons, scaling guides, and trader education, explore Prop Firm Insider.