When should traders take a payout?

Payout examples

Payout parameter tables

This is a great question, and there is no “one size fits all” answer. Realistically, when you request a payout, how much you request is going to vary from trader to trader. The answer really depends on who you are and how you need to operate.

The goal of a trader is one thing, to make money. It may sound greedy, but that is ultimately why we are here, to take money out of the markets and put it in our own pocket. As a trader, you take risks in the markets to reap potential rewards, and like any other business, you want to be paying yourself. Trading is a business and should be treated as such.

There are a number of things one should consider when taking money out of their trading account, the most important consideration being survival. When you decide to pull money from your account, the first thing you should be thinking about is, “How will this affect my ability to continue operating in the markets?” In other words, you want to ensure that the money you pull out will not affect your ability to continue trading if you hit a rough patch. You should always feel comfortable with the amount you are pulling.

The best way to think about how much you should request would be to think about what percentage of your overall account you are pulling out. Am I pulling out 50% of my account, or am I paying myself 10% of the account balance?

Where the payouts vary for most people will depend on their risk tolerance, specifically how much they are willing to risk or lose in a single trading day or trading week. Usually, traders like to maintain a certain account balance based on how much they need to keep in the account to post margin for their contract sizing. The other factor to consider is, “How much do I allow myself to draw down on my losing days?”

Traders that assume large risks will want to maintain a larger account balance so as to ensure they do not blow out their account in a single day(s) or even a single week. Traders who do not risk as much on any given trading day might not need to maintain as large an account balance. The amount a trader maintains should be determined by the size of their max risk on their losing days.
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​For example: If I have a $10,000 trading account balance, can I request $5,000 of it?

A trader should always measure out how many losing days they could survive when thinking about how much to keep in their account and how much they should request.

The reality is payouts do not need to be huge when you take them. There is nothing wrong with paying yourself in small amounts! Whether it’s a $100 payout you take or a $1,000 payout you take, you should make an effort to pay yourself often. Have a good trading month? Account balance over what you usually maintain? PAY YOURSELF! Have an unusually large winning day? PAY YOURSELF!

It feels good to turn those numbers you see on your computer screen that say “Account Balance” into something tangible that you can put in your hand to use in the real world. Whether it’s buying yourself a basic lunch, treating yourself to something nice, or paying the bills, THIS IS WHY YOU ARE HERE!

Paying yourself can and will also help with your money management when in the markets. Again, it lets you know that that Account Balance isn’t just a number on the computer screen; it's real money! It could also influence your decisions while in a trade for the better. If you’re up money on the week going into Friday and had intended to take a payout at the end of the week, well, you might be more conscious of hanging onto the money you’ve made and potentially get out of a trade you are unsure of to ensure you walk away up on the week.

For more insight and discussion around payouts and maintaining an account balance, click to watch Topstep’s Coach’s Playbook: When, How, and Why to Pay Yourself! You can review Topstep's payout policy here.

$5,000 Account Balance

$10,000 Account Balance

$15,000 Account Balance

$20,000 Account Balance