Wondering why understanding prop trading profit splits helps beginners? It defines how earnings are divided between the trader and the firm. These splits vary widely, ranging from 50% to 90% in favor of the trader. Some firms even offer up to 100% profit retention for initial thresholds before standard splits apply.

However, achieving consistent profitability in prop trading is challenging. A study revealed that only 7% of traders managed to turn a profit, with average earnings equating to just 4% of their allocated capital.

While higher profit shares are attractive, they may come with stringent evaluation processes or higher fees. For instance, some firms offer a 100% profit split but require traders to pass rigorous challenges and may charge substantial evaluation fees.

Profit split models in proprietary trading determine how earnings are divided between traders and firms. Choosing the right model can significantly impact your profitability and long-term success.

According to industry reports, 70/30 and 80/20 splits are the most common, but some firms offer traders up to 90% or even 100% of their profits in specific cases (Finance Magnates). However, traders must also evaluate other factors, such as withdrawal policies, trading conditions, and evaluation processes, before committing to a firm.

How Prop Trading Works

Proprietary trading allows traders to use a firm’s capital to trade financial markets. Unlike individual retail traders who use their own funds, prop traders get access to larger capital pools provided by the firm. In return, traders share a portion of their profits with the firm based on a pre-agreed prop trading profit split model.

Getting Started with a Prop Firm

When a trader joins a prop firm profit sharing model, they receive a capital allocation based on their experience, trading skills, and past performance. Some firms start traders with a small account, while others provide access to significant funding right away. The firm sets rules and risk limits to ensure their capital is protected. Traders in prop firms use different strategies, including:

• Short-term trading – Quick trades executed within minutes or hours.
• Swing trading – Holding trades for days or weeks.
• Position trading – Long-term strategies based on market trends.

How Prop Firms Operate

Prop firms work differently from hedge funds. Hedge funds manage money for investors and share 60–80% of the profits with their clients. Meanwhile, prop firms use their own capital and do not rely on outside investors. This gives them more control and flexibility over trading decisions.

Since they don’t have clients to answer to, prop firms keep a larger share of the profits generated by their traders using funded trading accounts profit splits. This allows them to reinvest in better technology, risk management tools, and trader education programs.

How Prop Firms Make Money

The primary way prop firms make money is through profit-sharing agreements with their traders. For example, if a trader makes $100,000 in profits and has a 40/60 split, they take home $40,000, while the firm keeps $60,000.

Some firms also generate revenue through:

• Education programs – Offering training courses for traders.
• Technology fees – Charging for access to proprietary trading tools.
• Challenges and subscriptions – Some firms charge fees for traders to qualify for funding, but this model is declining due to stricter regulations.

Prop trading provides an opportunity for skilled traders to access significant capital, but success depends on strategy, discipline, and risk management.

Types of Prop Trading Profit Splits

Fixed Percentage Splits

Fixed percentage prop trading profit splits are the most straightforward and predictable prop trading profit sharing structure. The trader receives a fixed portion of their generated profits, while the firm keeps the remaining share. These splits typically range from 50/50 to 80/20, with some firms offering even better deals for experienced traders.

For example, if a trader operates under a 70/30 split and earns $50,000 in profit, they would take home $35,000, while the firm retains $15,000. Here are some advantages:

• Predictability – Traders always know how much they will receive.
• Simple structure – There are no complex calculations or conditions.
• Common among firms – Most proprietary trading firms offer fixed splits.

Graduated Splits

Graduated splits introduce a tiered structure where traders receive a higher percentage of profits as they reach specific profit thresholds. These tiers encourage traders to perform better and achieve higher prop trading payouts over time.

A firm might start a trader at a 50/50 split, but once they generate $10,000 in profits, their split increases to 60/40. If they exceed $50,000, the split could improve to 70/30 or even higher. Reasons for the popularity of graduated splits:

• Motivation for traders – Higher profits lead to better payout percentages.
• Rewards consistency – Firms incentivize traders who sustain profitability.
• Balanced risk management – Firms benefit by ensuring traders remain profitable before offering higher splits.

Performance-Based Splits

Performance-based splits are customized profit-sharing models that adjust based on individual trader performance. These models consider:

• Profitability – Higher prop firm profit sharing may lead to a better split.
• Risk management – Traders who manage drawdown effectively may receive a higher share.
• Trading volume – Higher frequency traders may be rewarded with better splits.

For example, a firm might start traders at 60/40 but increase the split to 80/20 if they achieve a high win rate and low risk exposure. Some firms even offer 100% profit retention for traders who meet strict criteria. Why you should try performance-based splits:

• High earning potential – Skilled traders can access industry-leading profit splits.
• Fair reward system – Traders are compensated based on their actual performance.
• Encourages skill development – Firms support traders who consistently improve.

Choosing the Top Prop Firms for Traders

Selecting the top prop firms for traders is all about finding a firm that aligns with your trading goals, style, and risk tolerance. A great prop firm offers favorable profit splits, low fees, diverse asset classes, solid trading platforms, and realistic evaluation processes. Some firms cater to futures traders, while others focus on forex, crypto, or stocks. The best firms also provide fast payouts and supportive trading conditions, making it easier for traders to scale their accounts and maximize earnings. Here are some key things to consider when choosing a prop firm.

1. Reputation and Regulations

A good prop firm has a strong reputation and follows trading regulations. Check reviews from other traders and see if the firm has any complaints or legal issues. A well-respected firm is more likely to be trustworthy and stable.

2. Available Capital

Prop firms profit sharing provide traders with money to trade. Some firms offer more capital than others. Look for a firm that gives enough funding for your trading strategy without putting too many restrictions on your trades.

3. Profit Sharing and Fees

Most prop firms split profits with traders. Some firms take a larger share, while others allow traders to keep more of their earnings. Also, check for hidden fees, like software or platform costs, which can eat into your profits.

4. Trading Rules and Flexibility

Some firms have strict rules about trading styles and strategies. Make sure the firm allows your preferred trading methods, whether it’s short-term, swing trading, or holding positions overnight.

5. Customer Support

Good support can make a big difference. Look for a firm with a helpful team that answers questions quickly and provides useful resources.

Choosing the Right Prop Firm

Firm Name	Best For	Profit Split	Tradable Assets	Evaluation Process	Trading Platform(s)	Minimum Payout Time	Scaling Plan	Key Features
The Pride Funding	Best Prop Trading Firm	Up to 90% to 95%	Futures, Crypto, Commodities, Forex	One-step evaluation and Two-step evaluation	MT5	14 days	Up to $400K	5% daily draw outs Flexible trading rules Weekend holding allowed Profit target 8%
MyFundedFutures	Fastest Payouts for Futures	90% (100% for first $10K)	Futures	One-step evaluation	NinjaTrader, Tradovate, TradingView	24-48 hours	Up to $600K	No daily loss limit No minimum trading days Supports major exchanges
For Traders	Best for Beginners	80%-95%	Forex, Commodities, Metals, Energies	Custom challenges	cTrader, TradeLocker, DXtrade	7 days	Up to $300K	Weekly payouts Strong educational resources Active trader community
BrightFunded	Best Multi-Asset Trading	Up to 100%	Forex, Crypto, Indices, Metals	Two-phase evaluation	Proprietary platform	4 hours	Unlimited Scaling	40+ Crypto pairs Weekly payouts No max withdrawal limits
FXIFY	Best for Experienced Traders	Up to 90%	Forex, Stocks, Indices, Commodities, Crypto	One-step evaluation	MT4, MT5, FXPIG	Instant	Up to $4M	Instant payouts Automated trading allowed Tight spreads & leverage

Conclusion

The prop trading profit split is the first factor traders should think of when prop trading firm comparison. Some firms offer traders a larger share of their earnings, while others take a bigger cut. It’s important to find a firm with a fair profit split that rewards your skills and effort. Also, check for hidden fees that could reduce your earnings. A good firm will provide the right balance of funding, flexibility, and support, helping you maximize your profits while trading with their capital.