I was fired from my previous company due to bad performance on the job. What to tell to potential recruiters about my employment status? Will letting them know that I don't have a job make them lose interest in pursuing with me? Will it reduce my ability when it comes to negotiating the salary/benefits later?
What to tell to potential recruiters about my employment status?
Simple: Just don't tell recruiters that you were fired.
At the end of the day, being let go for bad performance doesn't necessarily reflect poorly on you (and often doesn't). There are many lackluster managers in the world, and sometimes your team just wasn't a good fit for you.
I highly recommend checking out the following thread, which shows the community coming together to echo this overall sentiment in more detail: "Success story after PIP?"
In terms of what to say, just tell them you were let go. Given the current layoff climate, they will probably assume you were laid off and give you some sympathy.
If push comes to shove and they ask you exactly why you were let go, you can say: "It wasn't a good fit, so we decided to part ways." This is still true without making you look like a toxic low-performer.
Will letting them know that I don't have a job make them lose interest in pursuing with me? Will it reduce my ability when it comes to negotiating the salary/benefits later?
Yes to both of these, especially the first. This is why you shouldn't volunteer this information and should obscure it in general.
When it comes to hiring, a lot of snap judgments are made as recruiters need to make big decisions with candidates (i.e. "Do I give this candidate an interview?") in a small amount of time. If you let them know you were cut for poor performance, you are immediately putting a black mark on your head that signals that you're a risky hire.
I agree with Alex that you should simply not tell the recruiter. In general, I see a tendency for engineers to over-share when they talk to companies:
There's an information asymmetry between you and the recruiter. They look at hundreds of applicants per day, so you should not share too many details unless there's a benefit for you.
Tactically, here are some phrases you can use to gracefully talk about why you left:
I learned a lot in my previous role and I know a lot more about the ideal environment for my impact and success
You're hinting here about potential issues you faced, but it's a much more positive spin in terms of your learnings
I'm really excited for this new opportunity for X reason
Focus more on the job you're applying for rather than the job you left. X could be the company, tech domain, the people, etc.