Prop firms give traders the power to trade at scale, with account sizes that are larger than many traders could otherwise afford.
So, how do prop firm payouts and profit-sharing work? If you can manage risk, follow a logical trading style and strategy, and keep making positive trades, what should you expect?
In the last chapter of our guide, we covered the benefits of trading with a prop firm instead of a broker. Now, we’re taking a closer look at the key benefit that comes with prop trading: the profit split, also called the payout.
Keep reading to learn more about prop firm payouts. We’ll cover everything from the rules traders need to follow to earn payouts to how to find prop firms that offer industry-leading profit sharing.
The Basics of Prop Firm Payouts
The following section will explain some of the basic concepts of how traders can earn their payout, the benefits of trading with a prop firm, and the rules traders need to follow to receive their payout.
How Prop Firm Traders Earn Payouts
In traditional trading, like Forex trading, traders earn a profit when their positions change in their favor. As Forex.com points out, traditional trading provides earnings (or losses) directly from the fluctuations in the value of currency pairs.
It’s a little different in prop trading. When traders purchase a challenge account from a prop firm, they gain the opportunity to earn payouts typically after passing the challenge phase. Traders need to follow the rules of their accounts, meet the challenge objectives, and earn a positive return in their simulated trading activities.
Do prop firms actually pay out? Yes! Reputable prop firms do. Learn more about finding a trustworthy prop firm in Chapter 2 of our guide.
Meeting the challenge requirements puts traders in a position to earn a prop firm payout. The specifics of profit splits vary from one firm to the next. However, the best payout prop firms will make their payout schedules, percentages, and profit-sharing increases clear to current traders and those interested in joining in.
As a matter of fact, FundedNext processes payouts within 24 hours of when a trader initiates a payout request. Once the payout transfer is complete, FundedNext traders receive a confirmation email with a payout screenshot as proof. If, for any reason, the 24-hour timeframe is not met, traders will receive $1,000 compensation added to the payout.
Benefits of Prop Firm Trading vs. Traditional Trading
We know that risk management is key in all types of trading. One of the biggest benefits of prop trading is that the challenge models help you manage risk as you work toward a payout.
Let’s compare some key differences between the two types of trading. In traditional trading:
- You have to put your own money on the line directly for every trade.
- You are responsible for the leverage in losing trades, increasing possible costs.
- Minus commission and fees, you get the full return on winning trades.
In prop trading:
- You purchase an account, and potentially add-ons or extras, for a fixed cost. The account size — the amount of funds you can trade with — is much higher than the actual account cost. Compare account sizes versus fees for our Evaluation challenge model as an example.
- You are still responsible for losing trades. But even a worst-case scenario will only result in you losing your account — you won’t ever have to pay for those losses out of your own pocket, including the actual cost of the trade as well as leverage used on losing trades.
- You earn part of the return of your overall trading performance. The biggest prop firm payout, including the top option we offer, is 95%. That’s nearly the same return as traditional trading!
Rules and Requirements for Payout Eligibility
Specific rules and requirements for payouts vary from one account and firm to the next. However, a trustworthy prop firm will make those rules clear to you before you sign up.
In general, challenge accounts often have rules related to profit targets, maximum losses, and minimum trading days. Some challenges also limit or prohibit certain trading styles, put consistency rules into place, and require traders to reach the profit target within a certain time limit.
Meeting these rules isn’t always easy, but it is entirely possible when using an account from a legitimate prop firm.
How to Find the Best Prop Firms for Payouts
Now that you have a grasp of the basics of prop firm payouts, let’s look at how to find the best prop firms for payouts.
Evaluating a Firm’s Stability
No one wants to fall victim to a scam. So, how can you tell if a firm is legitimate and actually provides prop firm payouts to successful traders? Look for prop firms that:
- Make rules, requirements, and payouts clear through resources on their website before you sign up.
- Offer comprehensive 24/7 customer support.
- Have a history of largely positive reviews on established platforms like Trustpilot.
- Has an active social media presence and trader community, like our Discord community.
- Shares success stories and testimonials from current and past traders.
- Ensures a payout guarantee that benefits traders and ensures they receive their payouts on time.
Stable, trustworthy prop trading firms will offer generous payouts and consistent schedules, but won’t make promises that don’t make sense or seem too good to be true. If you see offers like a daily payout prop firm promising payouts to all traders regardless of their performance, for example, it’s a clear sign of a scam.
Payout Timelines
The timing of payouts is important to prop traders, and rightly so. However, prop firms with the fastest payout are only part of the equation. The percentage of the profit split is also crucial, as is the consistency of payouts.
Payouts offered by prop firms generally range from multiple times per week to monthly. While longer times between payouts aren’t necessarily a red flag, few traders want to wait very long periods of time to get their rewards.
Profit Splits
Profit splits from prop firms can vary significantly, even within the same firm. Different account types can offer different profit splits, and optional add-ons can increase the split in your favor.
In general, profit splits from 50% to 80% are common. Some firms, including FundedNext, offer even higher splits — up to 95%!
A Prop Firm That Prioritizes Payouts
Between our payout guarantee and generous profit splits, FundedNext is proud to put traders first and reward them for their success.
Want to learn more about prop trading? Chapter 6 of our guide covers Forex charts and trading strategies.
Ready to start trading? Find the right FundedNext account to maximize your profits. Compare payouts and challenge details to start your journey today!
