# What is Performance reward?

> A performance reward is the payment a prop firm makes to a trader based on results in a simulated funded account; it is the compliant name for a prop payout.

- Source: https://pipvalley.com/glossary/performance-reward
- Publisher: PipValley - web design studio for prop trading firms
- Updated: 2026-10-03

In a prop firm with a simulated funded stage, the trader is not withdrawing their own profit from a brokerage account. The firm calculates a reward based on simulated results and the profit split, and pays it under its own terms.

Using performance reward, or virtual profit share, in terms and site copy keeps the description accurate. It signals that the payment is made by the firm under contract, not a return on capital the trader invested.

How the reward is characterized can matter for tax, payments and regulation, which vary by jurisdiction; take advice before settling the wording in your terms.

## Why it matters

Words like profit, earnings and withdrawal can imply a live trading account or an investment product. Performance reward describes what actually happens and is easier to defend with payment providers and regulators. Use it consistently on the site, in the dashboard and in payout emails.