The focus of this interview is proprietary trading, otherwise known as prop trading, and my guest is Dylan Loomer, the co-founder of
Proprietary trading is a type of trading activity where a financial institution trades financial instruments leveraging its capital for profit. Evaluation-based proprietary trading, unlike traditional proprietary trading, does not have a formal interview process but instead charges an upfront fee for prospective traders to undertake an evaluation.
Unlike traditional trading models, proprietary trading has a large access to capital and a huge potential for high returns. But on the flip side, it can also attract significant losses and be subject to regulatory scrutiny.
We dive into the world of proprietary trading with Dylan Loomer to unravel Breakout's unique approach to optimizing the crypto trading experience.
Please note that ‘prop trading’ is sometimes used interchangeably with ‘proprietary trading’.
Dylan, can you tell us about yourself and your route to crypto and proprietary trading?
I started trading and discovered crypto in 2013. My route to crypto was initially via speculation. Regarding prop trading, it has been around the FX space for some time. I first traded with a prop firm in 2020. After a decade of trading, I decided to utilize my expertise and experience to be productive and build something for a change.
What is proprietary trading, and how does it relate to cryptocurrency?
At its core, prop trading involves trading with someone else’s capital. There are usually rules and performance metrics attached to a trader’s account. As far as prop trading and crypto are concerned, while there are plenty of traditional prop firms in the crypto space, there are very few evaluation-based prop firms that have accurately replicated crypto’s unique trading conditions.
We believe this is the first product of its kind.
What can you tell us about the founding of Breakout?
Our founding team is composed of experienced crypto native founders and traders. We decided to start Breakout to bring the popular evaluation-based prop firm model from FX into the crypto space. This model has seen limited success in the crypto space on account of poor execution and trading conditions, usually offered via legacy brokers.
Through computer simulation, Breakout helps users experience real market conditions and hone their skills during the evaluation stage before venturing into live trading in a funded environment.
How essential is risk management in prop trading?
That is a great question! Risk management is at the very forefront of prop trading. In both the evaluation stage and the funded trading stage, there are drawdown rules that must be adhered to. This benefits both the trader in their decision-making but also protects us as a firm.
How does Breakout differentiate itself from other prop trading firms?
Our two main differentiating factors are superior execution (notably on the crypto side) and radical transparency. Regarding execution, we believe we are the first evaluation-based proprietary firm whose crypto trading environment sources liquidity directly from Bybit/a tier 1 centralized exchange.
This is a very significant improvement to the status quo of offering crypto trading via legacy brokers with worse spreads and execution in general. Regarding transparency, a full outline of our business model as well as monthly data sharing of our key metrics (evaluations purchased, pass rates, and more) are available.
Can you tell us about Breakout's technology stack?
Our technology stack allows us to source liquidity directly from Bybit/a tier 1 centralized exchange on the crypto side while also offering raw spreads from ThinkMarkets on the legacy side.
This is a huge leap forward, especially on the crypto trading side, where evaluation-based prop traders have consistently been faced with poor execution and an experience far removed from a centralized exchange trading experience.
What are the benefits and risks of participating in Breakout's prop trading evaluations?
The benefit of participating in an evaluation is that if a trader passes it, they receive access to a Breakout Account. This account allows traders to receive payouts based on their trading performance (while keeping up to 90% of those gains). The risk is that statistically, evaluation pass rates across all prop firms are low, and taking an evaluation comes with a fee.
What are the challenges and opportunities of prop trading in the crypto industry?
The main challenge is creating trading conditions that are familiar to crypto native traders, especially when it comes to trade execution (spreads, available liquidity, and so on). We believe we have done that. The opportunity is trading crypto with a larger sum of notional capital in realistic conditions without risking your own capital or custodying your assets with a third party.
And final words?
We are excited to bring Breakout to the world and encourage interested traders to learn more.