One of the most important aspects of prop trading is the profit split—the percentage of profits a trader keeps versus what the prop firm retains. This structure varies across different firms and can significantly impact a trader’s earnings. In this guide, we’ll break down how profit splits work, the common models used by prop firms, and what traders should consider before choosing a firm.

What Is a Profit Split in Prop Trading?

A profit split is the portion of trading profits that a prop trader keeps after successfully completing trades. Since prop firms provide capital, they take a share of the profits in return. These splits usually range between 50/50 to 90/10, with some firms offering even more competitive rates based on performance.

Common Profit Split Models

1. Fixed Profit Split

• The trader keeps a fixed percentage of the profits (e.g., 70%) while the firm retains the rest (e.g., 30%).
• Common in most prop firms as a straightforward structure.
• Ideal for traders who want predictability in their earnings.

2. Scaling Profit Split

• The profit share increases as the trader reaches higher profit milestones.
• Example: A trader may start with a 60/40 split, but after earning $5,000 in profits, the split increases to 80/20.
• Encourages traders to perform consistently and reach higher earnings.

3. Performance-Based Profit Split

• Profit share is based on performance metrics such as risk management, consistency, and drawdown limits.
• Some firms reward traders with a higher split for long-term profitability.
• Great for disciplined traders who focus on steady growth rather than short-term gains.

4. No-Profit-Split Models

• Some firms offer traders 100% of profits but charge higher fees upfront or require a large initial deposit.
• Usually found in firms that operate with subscription-based funding models.
• Can be beneficial for highly skilled traders who don’t want to share their profits.

Factors to Consider When Choosing a Profit Split Model

Firm Reputation & Transparency – Check whether the firm has a track record of fair and timely payouts.

Withdrawal Frequency – Some firms allow weekly withdrawals, while others require a minimum profit threshold before payouts.

Scaling Opportunities – Look for firms that increase profit splits as you gain experience and prove consistency.

Fee Structure – Some firms offer higher profit splits but charge evaluation fees, commissions, or inactivity fees.

Conclusion

Choosing the right profit split model is crucial for maximizing earnings in prop trading. Whether you prefer a fixed split, scaling structure, or performance-based rewards, understanding the terms can help you make an informed decision. Always research prop firms carefully and choose one that aligns with your trading goals and risk appetite.

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