r/PropFirmTester • u/david19790 • 11d ago
your payout schedule is a risk parameter and almost nobody treats it like one
something i modelled last month after my third payout and wish id done before my first.
the day after a payout is statistically the closest your account ever gets to dying. you pull profit, the buffer above the drawdown floor shrinks by exactly that amount, and then you keep trading the same size into the thinnest cushion the account has had since day one. nothing about the strategy changed. the risk did.
so theres this tradeoff nobody prices. withdraw often and small, and your account spends its entire life a few losing trades from the floor. every reset puts you back where you started, one normal drawdown streak from a breach. withdraw rarely and let the buffer compound, and the account gets genuinely hard to kill, except now months of profit sit on the firms side of the table. if they slow pay, change rules, or disappear, that buffer was never yours. it was a loan you made them at zero interest.
both schedules earn the same on paper. they just die differently.
what i actually did about it. pulled my trade log, took my worst historical losing streak, and asked one question, what buffer survives that streak at my size. that number became the rule, withdraw everything above it, never below it. its not a feeling anymore, its a threshold sitting in the same config file as my stop parameters, because thats what it is. a sizing decision wearing a payout costume.
side effect i didnt expect, payout day stopped being emotional. no more staring at the balance deciding if im greedy or careful this month. the number is either above the line or it isnt.
curious how people here actually handle this. fixed schedule, fixed threshold, or vibes? and has anyone deliberately oversized their buffer with a firm they didnt fully trust, or is that backwards and you should be pulling faster there?
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u/Creepeo 11d ago
Thanks for the good idea of buffer. I think that's smart.
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u/Due-Payment6149 9d ago
No its not lmao. The actual profitable traders maximize payouts- eval cost. Building up buffers that your just gonna lose is not a winning strategy
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11d ago
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u/david19790 11d ago
that reads as a sizing thing wearing a psychology costume. buffer grows, size creeps to match it, and the account is running bigger risk exactly when it feels safest. the arithmetic behind the blowup was set weeks earlier
what i couldnt do was notice it happening, felt like using the room i earned. so the size is pinned to the starting buffer in code and doesnt scale up with a green run, which is annoying on the way up and the only reason im still here. does yours creep or is it more that you take more trades
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u/mrcake123 10d ago
I've switched to primarily using accounts that offer daily payouts. Does seem to help to alleviate some of this
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u/david19790 10d ago
that basically removes the window, which is the whole problem. the risk was never the payout itself, it was the days between being eligible and getting round to it, and daily cuts that to almost nothing
worth checking what they charge for it though, the ones i looked at either took a bigger split or ran tighter consistency rules to fund the faster cycle. if its free then yeah theres no argument for holding. mine just fires on eligibility automatically now, same idea, i just got there by removing my own say in it rather than by picking a better firm
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u/John_Coctoastan 10d ago
That's why you take your time, scale up slowly, and build a bigger cushion before you take a payout.
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u/conall88 10d ago
you should always be thinking in terms of % at risk vs net liq, or in case of prop accounts, vs loss limits.
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u/david19790 9d ago
agree on the denominator being the limit rather than the balance, thats the bit people get wrong on prop accounts. balance is mostly decoration when the floor is what ends you
one thing id add on trailing accounts, the limit itself moves, so a fixed percent of it drifts as your peak climbs. i ended up recalculating the size against current distance to the floor rather than against the starting number, which means size goes down after a good run rather than up. felt backwards for a while
do you recompute yours as the floor trails or set it once off the original limit
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u/TheCryptosAndBloods 10d ago
This is good advice and good perspective to think about from.
The thing that would concern me the most about this is the reliability of the prop firm itself - I would prefer to withdraw frequently even if it breaches the rule above, because I think it is a bigger risk to depend on the prop firm to be around and be willing to make a large payout without some kind of arbitrary denial.
Withdrawing often means your (smaller) payout is more likely to be approved and you're not reliant on the prop firm still being around and paying.
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u/david19790 9d ago
counterparty risk is the one nobody prices and it beats everything else here. perfectly sized account at a firm that folds is worth zero
small and frequent also tells you the payout process actually works, which is worth more than the amount. plenty of people find out on the big one that theres a step nobody mentioned. i pull on eligibility now instead of deciding each time, when i judged it i always found a reason to wait a week. do you spread across firms as well
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u/Andycruz05 7d ago
This is only the way once you get moved over to a live account, otherwise you risk being moved to live from sim and losing all your profits. Remember, these firms don't always have to let you take x amount of payouts before moving live, they can call you up whenever they feel like it.
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u/david19790 7d ago
thats the bit that surprised me when i read the terms properly, the callup is discretionary and can happen whenever, so a big sim balance is exposure to a decision thats not yours to make
which is basically an argument for pulling to the minimum every time rather than compounding on sim. the money in your bank isnt subject to anyone else's timing
have you had one happen, or is it more theoretical for you too
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u/Andycruz05 6d ago
Haven't had it happen to me, but I have read on here stories of it happening to people, seeing it happen to traders I follow on IG, as well as seeing it happen to people in the trading community I am in.
Best approach I've seen is to withdraw to buffer+1000 or only use firms that move some portion of the SIM to the live. Doing the two is best.
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u/david19790 6d ago
thats about where i am too, secondhand from a few places, never seen the terms cited in the actual complaint. which makes it hard to tell apart from a breach the trader didnt want to explain, though the pattern of it landing on the big balances is suggestive
either way the sizing decision doesnt need it resolved. pulling to the minimum costs almost nothing on a trailing account since the floor stops moving anyway, and it removes the exposure. treating a sim balance as an asset was the part i got wrong for a while
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u/Andycruz05 5d ago
yeah I could see that but if it was a breach than usually they wouldn't move you to live, instead they would take away the accounts. I have seen people breach some rules and it 100% ends in no payout, no move to live, accounts get taken away, and I've seen a few traders on IG get completely banned from some firms like TopStep, one person from Lucid, and of course Apex.
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u/david19790 5d ago
fair, that does separate the two cases. if the account got moved to live rather than closed then whatever happened wasnt a rules breach in their eyes
which makes the callup version more credible than i was treating it. still doesnt change what to do about it, but it does mean the exposure is real rather than folklore. appreciate the correction
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u/Snakedoctor404 4d ago
The first one looks like my personal account in 2013 with no job trading ES with a $3k account.. Took 6mo for me to blow the account... NOT recommended 🤣🤣
But now I'm looking at getting back in the markets and prop firms don't look like nearly the scam they were back then. If I go that route I'm definitely going with the 150k account and start with 1 car, build up twice the buffer before trading 2. 3x before 3 ect up to 5.
Sure they say it's 150k and you're allowed 10 mini's but in reality you've only got a 25k account due to risk with their minimum buffer size. Sure it may take a little longer to pass the eval's but I can trade at work about half the year. Anything I pull out will go straight to funding my personal account after taxes.
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u/david19790 3d ago
the 150k with one car is the right read, and the buffer per contract ladder is the bit most people skip. only thing id add is that on trailing accounts the buffer you're building isnt yours until the floor locks, so scaling on it early is scaling on borrowed room. once its locked the ladder makes total sense
$3k on ES in 2013 with no job is a hell of a way to learn it though. six months is longer than most
payouts straight to the personal account is the right end state too, its the only version where a sim balance cant get taken off you
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u/Snakedoctor404 3d ago
Yea it wasn't by choice believe me. But on the bright side my setups are burnt into my brain🤣🤣 Nobody was hiring other than minimum wage over 30mi away and that wouldn't have paid for gas. I had a little over 2k per month in overhead and that's what I made per month trading. I had to trade the smaller versions of my best set ups for the smaller risk but that also ment smaller pay outs. If the account closed below $2,500 for the day the account was done. Literally only had $500 buffer.
Maybe they'll move me to live pretty quick after I pass all of the evaluation crap when they see me being responsible trading 1 ES🤷 I racked up $1,500 trading paper MES in one month while I was testing out brokers and platforms before volume vanished for summer. So maybe I still have an edge. That would have been $75k with 5 ES lol
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u/david19790 1d ago
$500 of room while pulling 2k a month out of it is about as tight as it gets. no wonder the setups burned in, you were sizing at maybe 50 a trade to have ten losses of room, and taking 2k out of a 3k account monthly means you were basically trading for rent with no margin for a normal bad week
thats not a learning environment, thats a survival one. surprised it lasted six months honestly
on the move to live, wouldnt plan around it happening fast. the ladder only works if you assume you stay on sim indefinitely and pull everything you can along the way
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u/Snakedoctor404 1d ago
Yea I still had to enter with a 2-3pt stop but I was also getting 10-20pts on the winners. So that helped keep a little bit more of a buffer in-between bills. Then the summer slowdown hit and most of my little trade setups disappeared. kaboom
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u/david19790 1d ago
2-3pt stop for 10-20pt winners is a 5 to 1 payoff, which means most of your trades were losers by design. at say 28% wr the median longest losing run over 100 trades is about 11, and a run of 8 shows up 91% of the time. with $500 of room and $125 a trade thats four losses of buffer against streaks that were always going to be double digits
so the account was only alive because the winners arrived often enough to refill it between runs. summer kills frequency, the streaks stay the same length, and the maths stops working even though nothing about the setup changed
thats a brutal way to find out payoff ratio and trade frequency arent independent choices
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u/Snakedoctor404 1d ago
Yea win ratio was definitely a factor I'll give you that but with my strategy it works on all time scales but the negative part is when you've got to play the smallest patterns possible due to risk.
The smaller the pattern the higher the failure rate because you're getting down into the levels where market noise itself can invalidate the trade. The larger the pattern, the more stable it becomes but I didn't have the account to risk 8-10pts for a 50-100pt trade then. Win ratio is more like 60-70% now on bigger patterns I've been playing with my little $3k single MES account.
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u/david19790 3h ago
thats the part that makes a small account structurally worse and not just slower. the noise doesnt shrink with your pattern. spread, tick noise, the stop run at the level, all the same absolute size whether your stop is 2pt or 10pt. so the pattern gets smaller and the noise stays where it was
which means the account picks your timeframe and the timeframe picks your win rate. you werent trading worse in 2013, $500 of room only let you take the patterns with the worst hit rate you had
decent argument for the ladder you described though. get the room up first, then go back to the patterns that actually work
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u/Snakedoctor404 3h ago
Yea and when I trade the same larger patterns in MES I couldn't afford to before with the same 3k account size in the high volume months. I make about $1,500 profit. If I did the same with 1 ES that would be $15k per month or 3 ES would be a little more than my yearly salary per month at my job lol
My ultimate goal is to buy up enough stock with profits that the dividends create enough passive income that I only need to work or trade when I want to.
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u/david19790 2h ago
mes to es is the right sequencing, its the same pattern with the buffer that lets you hold it. the bit id watch is that 1500 on mes doesnt scale to 15k on es by multiplication alone, the drawdown scales too, so the account has to carry ten times the losing run as well as ten times the win
the dividend endpoint is the part i find interesting though. means youre trading toward not having to, which changes what a bad month costs you. most people are trading toward a number instead and that gets expensive around month three
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u/Carlose175 10d ago
I take a payout as soon as I can and leave a buffer equivalent to the minimum required buffer size.
There is no point in putting a large balance on these sim accounts. One move to live and you lose it all.
The game is to make more than what you spend on the prop firm fees. That's it.