Understanding the Payout Structure
- Profit Split: Standard is 80/20 or 90/10 in favor of the trader.
- Minimum Threshold: Many firms require a minimum profit (e.g., $1,000) or minimum trading days before the first withdrawal.
- Methods: ACH, PayPal, and Cryptocurrencies (often fastest).
The Importance of the “Safety Buffer”
Before requesting a withdrawal, traders should aim to build a “safety buffer” in their funded account. This is the difference between your current equity and the maximum trailing drawdown limit. Requesting a large withdrawal that brings your equity too close to the drawdown ceiling leaves you vulnerable to a quick account violation on your next trade. We recommend keeping at least 1-2 R-multiples (risk units) above the ceiling after withdrawal.
Tax Implications for Funded Traders
The income you receive is typically treated as independent contractor income (Form 1099 in the US). Key points:
- You are responsible for all tax deductions; the firm does not withhold.
- Challenge fees, data fees, platform subscriptions, and home office expenses are often deductible business expenses.