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Prop firm profit splits: how payouts and withdrawals work
Getting funded isn’t the finish line when it comes to prop firms. Withdrawing consistent payouts is. This is why understanding your prop firm’s profit split policy is a must. In this article, we’ll break down profit splits and exactly how they work. What’s a Profit Split? Profit splits decide how much of your profits you
Prop firm profit splits: how payouts and withdrawals work
Getting funded isn’t the finish line when it comes to prop firms. Withdrawing consistent payouts is.
This is why understanding your prop firm’s profit split policy is a must.
In this article, we’ll break down profit splits and exactly how they work.
What’s a Profit Split?
Profit splits decide how much of your profits you take versus what stays with the prop firm.
The terms vary widely between prop firms, but most Forex prop firms have an 80/20 profit split, whereas Futures prop firms can go up to 90/10.
If you want a full breakdown and comparison of Forex vs Futures prop firms, check out this article.
For example, if you make $10,000 in your $100,000 funded account, and your firm offers an 80/20 profit split, you will keep $8,000 and the prop firm will deduct $2,000.
Keep in mind that the $2,000 in this case isn’t actual money the firm has earned from your profitable trades. Everything is executed in demo conditions, so in reality, the prop firm is just paying you $8,000 out of pocket.
What Happens If You Lose Money in a Prop Firm?
Aside from getting you closer to your Maximum and Daily Drawdowns, losing money has no direct effect on the firm.
You will just end up having a smaller payout to request, given that you are in profit, but the profit split remains the same in all cases.
Do Prop Firms Make Money From Losing Trades?
In 99% of the cases, prop firms don’t profit when you lose trades, because the accounts are simulated and they are not opening trades against you.
They don’t do anything. This means that you’re neither A-booked, nor B-booked.
As discussed above, they make 0 from profit splits as well. Prop firms profit solely from challenge fees, since the majority of traders fail their evaluations.