The Funded Trader Rules Explained: Drawdown, Targets, and How to Pass

The Funded Trader (TFT) is one of the most recognised names in prop trading, offering three distinct evaluation models with account sizes up to $200,000. Understanding the exact rules — and critically, how their trailing drawdown works — is essential before you start any TFT challenge.

Challenge Types

TFT offers three evaluation models with meaningfully different structures:

Challenge	Phases	Profit Target	Daily Drawdown	Max Drawdown	Time Limit
Standard	2-phase	Phase 1: 10%, Phase 2: 5%	5%	10% trailing	30 / 60 days
Rapid	1-phase	10%	5%	10% trailing	Unlimited
Royal	1-phase	25%	None	8% trailing	Unlimited

The Standard challenge is the most common starting point. Rapid removes the second phase at the cost of a higher fee. Royal offers no daily drawdown limit but requires a 25% target — suited only for high-conviction traders with proven track records.

Standard Challenge: Account Sizes and Fees

Account Size	Phase 1 Target	Phase 2 Target	Daily Drawdown	Max Drawdown
$5,000	10% ($500)	5% ($250)	5% ($250)	10% trailing
$10,000	10% ($1,000)	5% ($500)	5% ($500)	10% trailing
$25,000	10% ($2,500)	5% ($1,250)	5% ($1,250)	10% trailing
$50,000	10% ($5,000)	5% ($2,500)	5% ($2,500)	10% trailing
$100,000	10% ($10,000)	5% ($5,000)	5% ($5,000)	10% trailing
$200,000	10% ($20,000)	5% ($10,000)	5% ($10,000)	10% trailing

Track your daily drawdown in real time with our The Funded Trader Drawdown Calculator.

How TFT's Trailing Drawdown Works

This is the most important rule to understand — and the one that catches the most traders off guard.

TFT uses trailing maximum drawdown, not static drawdown. This means your maximum loss floor moves up as your account equity grows.

How trailing drawdown works on a $100,000 Standard account:

• Start: floor is at $90,000 ($100k - 10%)
• You make $5,000 → equity is $105,000 → floor moves to $94,500 ($105k - 10%)
• You make $10,000 → equity is $110,000 → floor moves to $99,000 ($110k - 10%)
• The floor never moves down — only up as you profit

Compare this to FTMO or FundedNext, where the max drawdown floor is static from the initial balance and never moves regardless of how much you profit.

Why trailing drawdown is harder to manage:

On a static 10% drawdown account at $100k, you always have $10,000 of total drawdown room. On TFT's trailing model, as soon as you're up $5,000 your total room shrinks — because the floor has moved up, but you still face daily sessions with large market moves. A bad streak after a profitable run can eliminate gains and breach your floor simultaneously.

Daily Drawdown Rules

The 5% daily drawdown is equity-based — floating losses on open positions count toward your limit, not just closed P&L.

On a $100,000 account:

• Daily limit: $5,000
• If you're down $3,000 on closed trades and have $2,500 in unrealised losses, you're already over the daily limit
• Daily drawdown resets at midnight server time — verify your account timezone

Phase 1 vs Phase 2 (Standard)

Rule	Phase 1	Phase 2
Profit target	10%	5%
Daily drawdown	5%	5%
Max drawdown	10% trailing	10% trailing
Time limit	30 days	60 days

Phase 2 requires a lower profit target over more time. The trailing drawdown applies throughout — profits made in Phase 1 mean your floor has already moved up before Phase 2 starts.

TFT vs FTMO vs FundedNext: Drawdown Comparison

	TFT Standard	FTMO	FundedNext
Phase 1 profit target	10%	10%	8%
Phase 2 profit target	5%	5%	5%
Daily drawdown	5%	5%	5%
Max drawdown	10% trailing	10% static	10% static
Evaluation profit share	None	None	15%
Profit split	Up to 90%	Up to 90%	Up to 90%

The trailing drawdown is the critical distinction. If drawdown management is your priority, FTMO and FundedNext's static model gives you a more predictable risk environment.

Most Common Reasons for Failure

1. Not understanding trailing drawdown mechanics Traders make $5,000 in profits and feel comfortable — but their effective remaining drawdown room has actually shrunk as the floor moved up. One volatile session can breach the max drawdown on what feels like a modestly sized loss.

2. Equity-based daily drawdown with open positions Holding multiple positions during a news event and seeing unrealised losses accumulate past the 5% daily limit. The loss doesn't need to be closed to count.

3. Overtrading on Phase 1's higher target The 10% Phase 1 target is the highest among major prop firms. Many traders try to hit it quickly by overleveraging — this is the fastest way to fail. The 30-day window is generous.

4. Forgetting trailing drawdown after a winning streak After a strong run to 7–8% profit in Phase 1, traders feel the pressure has eased. In reality, the floor has risen and you have less absolute buffer than you started with.

How to Pass The Funded Trader

Risk 0.5–1% per trade maximum. On a $100k Standard account with a 5% daily limit, this means stopping after 5–10 losing trades in a session — not one bad trade ends your day.

Stop trading at 60% of daily limit. At $3,000 down on a $100k account, close your platform. The remaining $2,000 is not worth risking in revenge trading. This gives a hard stop well before the limit.

Track your trailing floor daily. Before each session, calculate your current equity high-water mark and subtract 10% to find your absolute floor. Never enter a session without knowing this number.

Use the drawdown calculator before every session:

The Funded Trader Drawdown Calculator

Target the 10% over 25–28 days, not 15. Conservative daily targets (0.4% per day) over the full 30-day window are more likely to succeed than aggressive sprints. You only need to hit 10% — not impress anyone with speed.

Payout Structure

• Profit split: 80% base, scaling to 90% with consistent performance
• Payout frequency: Bi-weekly once in funded status
• Minimum payout request: Varies by account size — verify in your dashboard

Summary

• Standard: 2-phase, 10%/5% profit targets, 5% daily drawdown, 10% trailing max drawdown
• Rapid: 1-phase, 10% target, same drawdown rules, no time limit
• Royal: 1-phase, 25% target, no daily drawdown, 8% trailing max drawdown
• Trailing drawdown means your floor rises with every profitable trade — more dynamic than static models
• Daily drawdown is equity-based — open floating losses count
• Risk 0.5–1% per trade, stop at 60% of daily limit, know your trailing floor before every session

→ The Funded Trader Drawdown Calculator
→ FTMO Drawdown Calculator
→ FundedNext Drawdown Calculator