What is payout liability?
Quick answer
Payout liability is the amount the firm may owe funded traders: the profit share on their current and future profits under the firm's terms. At any moment it can be estimated from funded accounts' open and realised profit. It is the largest financial risk a prop firm carries.
Detailed answer
Ways to measure it:
- Current: realised profit on funded accounts not yet paid, times the split.
- Potential: current plus floating profit on open positions, times the split.
- Projected: expected profit over the next cycle based on history.
Track all three. A sudden rise in floating profit across funded accounts warns of a large payout cycle ahead.
The data needed is per account: balance, equity and realised profit since the last payout. PropExecutor's API returns each account's balance, equity and open positions, plus a full report with the deal history, which you can aggregate to estimate liability.
Worked example
Twenty funded accounts show $40,000 of realised profit since their last payouts and $12,000 of floating profit. With an 80% split, current liability is $32,000 and potential liability $41,600. If the reserve holds $35,000, the firm is covered for current liability but not for the potential figure.
Recalculate it weekly.
PropExecutor team · Updated