All You Need to Know About Prop Trading in Spain

Proprietary trading, or prop trading for short, has been around on the financial markets for over a decade. Over the course of that period, hundreds of thousands of traders worldwide have obtained funding from various prop firms to trade anything from forex and commodities to stocks and crypto.

For traders based in Spain, looking to tap into some of that potential and get funded for their trading activities, numerous high-profile prop trading firms are available and easy to access.

But before we touch upon the specifics of prop trading in Spain and how it is regulated in the country, it is important to understand what prop trading is and why it has grown so much in popularity recently.

What Exactly is Prop Trading?

Proprietary trading is the process of trading where a prop firm provides funded accounts locked behind evaluation challenges, which need to be completed by traders in order to gain access to the funds.

Successful traders can greatly boost their buying power in exchange for an account fee and a minor cut of the profits they generate using the funded account.

For example, suppose a trader pays EUR 500 for a EUR 100,000 funded account and the profit split between the firm and the trader is 90% in favor of the trader. This means that 10% of any profits generated by the trader using the EUR 100,000 account will be claimed by the prop firm.

Prop trading challenge rules and limits

When a trader signs up and pays for a prop trading challenge, they will be met by the rules and limits that apply to that particular funded account.

These limits exist to limit the number of successful participants and only fund the traders that can meet the trading criteria laid out by the firm.

These rules and limitations include, but are not limited to:

• Profit targets – the percentage profit traders must generate over the course of the funding challenge in order to pass the evaluation
• Drawdown limits – the maximum daily and overall loss limit for each trader. Violation of the drawdown limit results in automatic disqualification
• Minimum trading days – the minimum number of active trading days required to beat the funding challenge

The rules and limits of prop trading firms can vary considerably, depending on the face value of the account, trading terms, number of evaluation stages and other factors.

Forex Regulations in Spain

Forex brokerage firms are subject to a number of regulations enforced by the National Securities Market Commission, or CNMV, as abbreviated in Spanish.

The CNMV also adheres to the MiFID II guidelines when it comes to ensuring client funds and investor safety by implementing transparency and reporting requirements to every licensed securities broker in the country.

Furthermore, the CNMV is harmonized with the ESMA regulations, which oversee the financial markets of the European Union as a whole.

Aside from the capital requirements and mandatory client deposit insurance, forex brokerage regulations in Spain also govern the relationship of these firms with regards to minority shareholders and their voting rights.

Conversely, prop firms are not subject to any of the aforementioned regulations, including the transparency and investor relations regulations.

The main difference between a prop firm and a brokerage firm is that prop firms do not deal securities to their clients. Rather, they use a third-party brokerage firm that facilitates trading activity and allows the clients of the prop firm to access its instruments.

Therefore, one of the main security indicators for prop trading firms are the licenses held by the brokerage firm they are partnered with.

Many forex prop trading firms have access to MetaTrader 4 and 5, which can also be attributed to their partner brokerage firms.

Prop Funding Challenge Payment Methods in Spain

As we have briefly discussed above, each funding challenge comes with a fee, which depends on the face value of the account, as well as the trading terms and rules that come with it.

When paying for a funding challenge, prop traders in Spain can choose between the traditional route of paying with a credit card, or by using an online payments app or crypto payment.

Credit Card payment

Banco Santander, BBVA, CaixaBank and Banco Sabadell are some of the largest banks in Spain and Visa and Mastercard credit cards issued by these banks can easily be used to pay the funding challenge fee at a prop firm.

As for any additional surcharges that may apply, make sure to contact the support representative of your local bank.

Online Payment Apps

Apps like Revolut, Klarna, PayPal and Wise are another convenient method to pay for the funding challenge fee and gain access to your funded account as soon as possible.

In order to make sure that the prop firm of your choice does indeed accept these apps, check the official website, or contact customer support to avoid any issues and potential loss of your funds.

Crypto

Prop trading firms do not only allow clients to trade Bitcoin and Ethereum, but to pay the challenge fees with the currencies as well.

Crypto transfers are fast and secure and provided that you have sufficient funds in your crypto wallet, you should be able to pay using crypto at most prop trading platforms.

However, a minority of prop firms may not accept crypto payments, so make sure to check for this in advance.

Financial Instruments Available at Prop Trading Firms in Spain

When traders sign up for a prop firm in Spain, they can expect to have access to different asset classes. While most prop firms are focused on forex trading, many also offer other instruments as well, such as: commodities, cryptocurrencies, stocks, and indices.

This gives treaders the ability to diversify their strategies and make quick adjustments when the market is going against their positions. This is key to avoid violating the drawdown limits.

Currencies

Forex trading is an essential part of the prop trading experience, which is why most prop firms offer dozens of currency pairs to their clients.

From major pairs, such as EUR/USD, to minors and exotics, prop traders have access to a decent selection of forex pairs. Typically, the spreads on major pairs are very tight, which makes it easy for traders to enter and exit the market rather quickly.

In some cases, firms will offer as much as 50 or more different pairs to their clients, while also having access to other asset classes as well, such as commodities and crypto.

Stocks

Prop firms that offer a decent coverage of stock trading are less common than forex prop firms. Regardless, some firms offer a number of stocks with a high market capitalization.

For example, AAPL, TSLA, MSFT and others are tickers that are more likely to be offered by prop firms, as opposed to small and mid-cap stocks.

In general, prop firms that have access to stocks will offer around 100 or more equities to their clients.

Crypto

Crypto trading on prop trading accounts is quite popular. Most prop firms give traders the ability to buy and sell Bitcoin as part of their strategy. However, other coins are also available in most cases.

Crypto trading provides clients with the ability to gain exposure to a highly volatile market, which also boosts the theoretical profits they can generate.

Commodities

Oil and gas, as well as gold and silver are popular inclusions on the list of instruments typically offered by prop trading firms.

Traders can use these instruments to diversify against forex exposure and take advantage of positive and negative interdependencies that exist between different asset classes.

The spreads on commodities also tend to be higher than major forex pairs, which creates more potentially profitable trading setups.

Indices

Indices from the biggest stock exchanges around the world are often offered by prop firms. Indices, such as the S&P 500, the DJIA, DAX-40 and others, serve as vehicles for prop traders to gain exposure to equities, which is especially helpful when dealing with firms that do not offer individual stocks to their clients.

FAQ on Prop Trading in Spain

Is prop trading in Spain legal?

Yes. Prop trading is legal in Spain. Unlike brokerage firms, prop trading companies are not subject to many regulations, as prop firms do not offer brokerage services and do not hold client deposits on their balance.

What can I trade at prop firms in Spain?

Prop trading firms in Spain offer a range of different financial securities, which includes: currency pairs, commodities, stocks, crypto and indices.

The selection of tradable instruments differ considerably between firms and traders can view the list of assets on the official website of the firms.

Is prop trading profitable in Spain?

The profitability of prop trading largely depends on the experience and knowledge of the trader. However, generating profit via prop trading is more than possible, as long as you pursue a sensible trading strategy that takes the rules and limits of the prop firm into account.