Payout Split Explained

prop-firm

Definition

The percentage of profits a trader keeps versus what the firm retains. Common splits range from 80/20 to 100/0 in favor of the trader. Some firms start at a lower split and increase it over time or after a certain number of payouts. Many firms now advertise 100% payouts after an initial period.

Explanation

In practice, firms use payout splits as a business model to cover their risk and operational costs. Newer traders typically start with lower splits (70-80%), while experienced traders can negotiate higher percentages. Some firms offer tiered systems where your split improves after successful payouts or meeting specific targets. The advertised 100% splits usually come with higher evaluation fees or other restrictions.

Example

A trader makes $5,000 profit on their funded account. With an 80/20 split, they receive $4,000 while the firm keeps $1,000. After three successful payouts, the split might increase to 90/10, giving the trader $4,500 from the same $5,000 profit.

Why It Matters

The payout split directly determines how much money you actually take home from your trading profits.

Common Misconceptions

  • 100% payout splits mean the firm makes no money

    Reality: Firms with 100% splits typically charge higher evaluation fees or have other revenue streams

  • The payout split applies to the entire account balance

    Reality: Payout splits only apply to profits above the starting balance, not the full account value