A Q&A with a former VP who's set up a prop shop
Sachin Shah is the founder and senior trader at Savi Trading. He was previously a vice president at Bank of America on the spot trading desk, where he traded the Yen book.
How long were you at BofA for?
6.5 years
What inspired you to leave?
The reward structure changed and I felt that hard work and strong performance was not being rewarded as it should. I was working long hours under stressful conditions and was exceeding the targets set by the bank. I decided that I would be able to generate better rewards by trading for myself with my own capital.
What made you decide to set up a prop firm?
After leaving the bank, I set up an online account and began trading from home, using my desktop. I found it to be a solitary environment where some days you don't even leave the house - you wake up, catch up on the market news and start placing trades through the day. Before you know it you've spent the entire day in front of a screen and not even spoken to anyone - a stark contrast to the trading floor at the bank!
After a few weeks of this lifestyle I decided to travel and trade at the same time to give me a change of scenery. On the move I found trading quite challenging as it was still a very solitary environment and there was a severe lack of information.
It was then I realised there was an opportunity to provide remote traders with a forum to discuss trade ideas and access to market information - in much the way that a trading floor at a bank works. The social aspect of the trading floor is an important element of making the right contacts and sharing trade ideas.
The market is an accumulation of views from all the traders around the world and the more views you have on board the greater feel you have of the market. By setting up Savi Trading I feel we have a great forum for our traders to exchange their views as well as have access to my experience and the views I exchange with my contacts around the world. I aim to create the environment of an investment bank trading floor in your home or wherever you chose to trade through your computer.
How many people work for you?
We currently have around 40 remote traders who are self employed who are supported by an in-house staff of five which we expect to treble in the New Year. Ultimately we aim to have 500 remote traders within three years. We also want to start an index of the top 10% of traders which people can invest in it, with the view of starting a fund.
What are the advantages of working for yourself/in a prop firm over working at Bank of America/for a major house?
At Savi we offer a lucrative profit share scheme to our remote traders so that they will receive the majority of the profits they generate with the funds provided to trade. This is in stark contrast to working for an investment bank, where you only receive 5 - 10 % of the profits you generate in some cases. In addition, we offer flexibility over trading hours, with individuals able to trade around their lifestyles and personal schedules and no stipulation of the minimum number of hours you need to trade. A number of houses will burden their traders with desk fees that the trader will need to cover from their trading before realising a profit each month, but Savi offer a remote access solution so there are no desk fees incurred.
What are the disadvantages?
You don't have the social face to face aspect of working on an actual trading floor at an institution, but you have online interaction - the next best thing.
What makes a good trader in a prop firm?
The qualities and skills to be a good trader are the same wherever you work. When in banks you are dealing with other members of the institution based in other teams but as a prop trader your only real concern is your P&L. Therefore, you have to manage your risks and rewards knowing that you are in charge of your own destiny.
What do you wish you'd done differently?
I wish that I had set this firm up a long time ago.
