What is the 40% Consistency Rule?

What is the 40% Consistency Rule?

The 40% Consistency Rule, or "40% Rule," determines that when requesting a withdrawal, no more than 40% of the profit balance in the Master account can come from a single trading day. This rule applies from the first day of trading until the withdrawal request. Here are some key points:

  • Application Period: This rule applies from the first day you start trading in your Master account until you request a withdrawal.
  • Rule Reset: After you request a withdrawal, the 40% rule resets. This means the calculation starts anew from the day of the withdrawal request to determine if the next withdrawal complies with the rule. Thus, each withdrawal request marks the beginning of a new evaluation period for applying the rule.
  • Objective: The purpose of this rule is to encourage diversification of profit flow, promoting adequate risk management and consistent trading performance over time. It prevents traders from relying on a single high-profit day to justify withdrawals, which might indicate an inappropriate risk strategy.

Calculation and Application:

  • Formula 1: Profit of your best day / 0.40 = Minimum profit required to comply with the rule. Example: If you made $900 on your best day, you need at least $2,250 in total profit to be compliant ($900 / 0.40).
  • Formula 2: Minimum withdrawal amount x 0.40 = Maximum daily profit allowed. Example: In a $50,000 account, where you need $2,600 for the first withdrawal, your daily profit should not exceed $1,040 ($2,600 x 0.40).
  • Risk Management: If you regularly exceed this percentage of profit on a single day, it might signal that your risk management isn't aligned with your account size or platform rules. Strategy adjustments might be necessary to ensure a more sustainable approach.
  • Consistency: For experienced traders who maintain a routine of consistent daily profits or limit themselves to not exceed a specific daily profit, compliance with this rule won't be problematic, as consistency is key to long-term success.

Remember, after each withdrawal request, the 40% rule count starts anew, encouraging ongoing disciplined and balanced trading practice.

Constraint Based on Total Payouts:
  • For standard Master Accounts:
    • Up to $30,000 in total payouts across all accounts: The consistency rule remains 40%.
    • Between $30,000 and $50,000 in total payouts: The consistency rule is reduced to 30%.
    • Above $50,000 in total payouts: The consistency rule is reduced to 20%.
  • For Instant Funding accounts:
    • Up to $50,000 in total payouts across all accounts: The consistency rule is 30%.
    • Above $50,000 in total payouts: The consistency rule is reduced to 20%.
For example, if a user with a 50K Master Account has $10,000 in profit and $20,000 in total payouts across all accounts, no single day’s profit can exceed $4,000 (40%) for a withdrawal. If their total payouts reach $50,001, the limit drops to $2,000 (20%) for standard accounts or $3,000 (30%) for Instant Funding accounts up to $50,000, then 20% thereafter. The consistency rule resets after each withdrawal request.