How to pass the FTMO challenge?

 

Manual vs Expert Advisor

Manually trading is generally more accurate but comes with a trade-off of lots of screen time. A good Expert Advisor has the ability to compensate for imperfect entries with some lightly 'aggressive' features like additional position if price retraces. 

 

The do NOT's:

• Do not trade an Expert Advisor without at least 1 month of demo account testing. Backtests are just an initial viability check but are far from real market confirmation. Be patient, and run your EA on a VPN for a minimum of 1 month. Review that it passed FTMO's criteria. e.g 5% daily drawdown, 10% total drawdown, 10% profit target. Base this on equity, not closed trades, because equity drawdowns are likely higher than the closed trades.

 

• Do not proceed without a statistical evaluation of your strategy. If your strategy isn't statistically robust, you will eventually lose money. I've provided some examples below.

 

Strategy evaluation

• Have you been practicing on the same leverage? FTMO uses 1:100 which may be smaller than you've been using. This will limit about of simultaneous trades available and margin calls.

 

• Do a 'risk of ruin' calculation. You'll need your win rate, average win, average loss. You want it to be statistically 'impossible' to fail the FTMO 10% max drawdown limit, so input 8% drawdown as a buffer. Adjust you risk so that it equals close to 0% for an 8% drawdown from 2000 trades. See the free MyFXBook calculator

 

• Can your strategy absorb irregular market behavior like news releases? You can't just hope a big market move doesn't happen during the FTMO challenge.

 

• Asset robustness. You should be able to run on different currencies without the strategy crashing. If it does, you may have over-optimized for one asset which will ultimately lead to failure.

 

• Timeframe robustness. You should be able to run on different timeframes without the strategy crashing. If it does, you may have over-optimized for one timeframe which will ultimately lead to failure.

 

• Frequency. It needs to be relatively frequent. The FTMO challenge requires 10 trade days within 30 days.

 

 

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