ProSpreads for Day Traders and Scalpers

ProSpreads started in 2005 under the name of FuturesBetting. The London Capital Group acquired in 2008 and changed its name to ProSpreads although later on LCG sold the entity to a private investor. ProSpreads is now owned by Argon Financial Limited.

ProSpreads claim to offer a professional advanced spread betting platform especially designed for scalpers and day traders in mind – please note that this platform is only suited to advanced traders; if you are looking to swing or position trade there are more suitable platforms.

Provider           More          Deposit MarginSpread TypeSpreadO/N Interest (Long)O/N Interest (Short)Trade MinMobile TradingJoining OffersWinning Proposition
Ayondo
Ayondo
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From 0.5% Depending on product.Fixed / VariableFrom 0.50 Indices, 1 pip FX, 0.1% equities+2.5% LIBOR or equivalent-2.5% LIBOR or equivalent40p per point Apple
Android
N/A
 
Financing charged only
on margined portion.
Social trading
Intertrader
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From 3-15% Depending on contractFixed / VariableFrom 1 pip Indices, 2 pip FX, 0.1% equities+2% RFR (Relevant Funding Rate)-2% RFR (Relevant Funding Rate)100p per point Apple10% of deposit
 
Competitive margins and fixed spreads even in volatile market conditions.

ProSpreads is based in Gibraltar and claims to be a spread betting provider catering exclusively to professional traders. Please note that being based in Gibraltar means that in the event of default by the broker you are ‘only’ protected up to a maximum of €20,000 per client unlike the 50k coverage that is available to UK FCA regulated brokers.

ProSpreads is basically a spread betting firm that claims to offer ‘DMA functionality’ in that it has the same effect as if you were accessing the underlying market (i.e. you get the liquidity providers prices + the fixed spread added by ProSpreads) in terms of the tight spreads, instant execution and level 2 order book…etc. Obviously you can only bet in contract sizes normally available on the underlying exchange i.e. the sizes that ProSpreads can hedge at which means that a company like ProSpreads can’t offer 10p per pip prices…etc This is because you can’t ‘bet’ these low amounts with liquidity providers…hence why a company like ProSpreads only offers 1.0 lot (i.e. $10 per pip) increments on the spread betting as they offer DMA and you are essentially having access to the Currenex liquidity with small fixed spread added by ProSpreads.

So in essence what ProSpreads claim to do is to offer ‘bet’ sizes that are ‘available’ on the underlying exchange – they use currenex liquidity on FX pairs and add their own spread to cover their costs (i.e. they are straight-through processing) but you can only bet in standard whole lot sizes i.e. 1.0 (which is the equivalent of $10 per pip for EUR/USD for example) and thus this approach would really only be aimed at professional spreadbetters who are looking to scalp or day trade with a decent account size and not the mass market.

When I had a good scalping run with IG Index they were quick to refer me to Dealer (i.e 30-50 scalps a day lasting a few minutes each and virtually all winners), not very often though, especially as I’ve now cut down scalping (!). Note that even with DMA you are not accessing the underlying market yourself….the broker is doing it for you on your behalf, it’s just you would pay commission instead of paying the spread…so I guess this is how ProSpreads can call it spread betting as they are taking your trade orders and just instantly hedging them and gaining from the spread rather than placing your trade directly through to the exchange and charging you a commission for it.

Features of Trading Platform

Users can spread bet in four different ways. The first is of course the traditional order ticket. The second is the fast “single click” ordering where the user defines an amount which is used to immediately place a bet. Additionally, ProSpreads allows users to bet from the Level 2 data screen which shows market depth. And finally, investors can use the “ladder” to place spread bets on a screen which shows the dynamics of the market.

The ProSpreads trading platform gives users Direct Market Access (DMA) functionality. This allows investors to see to the same information professional traders see before executing a trade.  In addition, clients also have access to Level 2 data, which can give you an indication of the liquidity and depth of the bid/offer. In addition, there are four distinct ways to place a spread bet and investors can choose the method that suits their goals.

For the instruments I trade / bet (about 10 FX pairs) they have on average the best available spreads I’ve seen amongst the spread betting industry. Of course whether this is cheaper than trading futures (in terms of the tax advantage) will depend on various factors specific to the individual. For me spread betting with spreads like those available with ProSpreads means that with the tax advantage the overall cost saving is significantly greater than the costs associated with trading with the likes of Interactive Brokers.

In addition to offering markets in the major indices, commodities and foreign exchange markets, ProSpreads now also provides access to individual shares on the FTSE 100, FTSE 250, Eurostoxx 50 and the Dow 30. Having said that this is quite a niche market and won’t appear to the mass market with $10 or equivalent minimum bet sizes and bet increments of $10 etc too. The company relies mainly on word-of-mouth, and apparently over 50% of present traders were introduced to ProSpreads upon the recommendation of existing clients.

As to why a broker would offer direct market access within a spread bet, I would imagine that it should be very profitable. All they are doing is acting like a regular broker and providing a spread bet wrapper (which I can’t imagine costs them that much in the grand scheme of things). For that they charge a decent premium above the regular commission cost.

Scalping as a strategy: Don’t need a seminar, just get a basic book on technical analysis and do a lot of screen time. A five minute chart and a 20 moving average may surprise you. Finding trades is not so hard, it’s money management, keeping your head together and taking all the entries after a loss. Most can’t do it.

You have to get over the idea that it’s very difficult. There are guys sitting in rows in trading rooms making huge returns every day. They do the same thing consistently and cut the losers ruthlessly. It’s more about mental control than complicated techniques.

I’m teaching myself to scalp the euro on 10 second charts, and on form and keeping sensible I hit eight winners out of ten. Some are tiny wins or scratch but the game is to avoid losers, not get big wins.

Main Advantage: No conflict of interest true direct access to the underlying markets with the naturally low spreads, with just a fair commission charged by the bookie, all wrapped up as a spreadbet for legal tax reasons.

Main Disadvantage: The ProSpreads platform is a fairly complicated affair and their charts are unstable, though apparently this is remedied by using their data feed in Esignal. Much larger deal size required (min I full lot).

“Simon Brown, managing director of ProSpreads says that clients at his company tend to trade much higher amounts than the average retail trader. Brown also noted that ProSpreads benefits from the fact that most of its traders are experienced meaning they are likely to trade for longer and are less likely to end up losing their capital. Professional traders focus on risk management, in particular exit criteria as well as entry point. Brown recalls that when he used to trade at the pit himself trading with his colleagues traders, often resulted in them creating equal and opposite positions to each other. However, ‘by the end of the day we would all have made money, because we had effective risk management strategies, which proved to be more important than whether we were long or short in the first place.'”