From the February 01, 2006 issue of Futures Magazine • Subscribe!

Bernie Carey – Trading is in the blood

Bernie Carey measures his success as a trader by the 40 years he traded grain futures at the Chicago Board of Trade (CBOT). “I lived to tell about it,” he says.

The 89-year-old Carey, who resides in Chesterton, Ind., began trading when he was 23 and still puts on a few trades a year. “I got to keep the heart pumping,” Carey says.

Carey comes from a family of CBOT traders. His father traded grains at CBOT, mostly wheat, for about 30 years; his nephew is CBOT Chairman Charlie Carey; and three of his four children trade at CBOT — one has spent 20 years in the corn pit, leasing Carey’s membership, and two trade electronically.

Carey found trading to be very exciting right from the beginning. “The tension and excitement and the opportunity made it interesting work,” he says. He traded outrights and spreads, but not options because they weren’t around at that time. He traded the most liquid grain contracts, concentrating mostly on soybeans. He learned to trade grains watching his father.

Carey worked in a General Motors factory for a year after graduating from Spring Hill College in Mobile, Ala., when his father purchased a membership for him at the CBOT — a membership he still held when the CBOT went public in October 2005. Carey, along with his nephew Charlie, CBOT President and CEO Bernie Dan and other CBOT directors, rang the opening bell at the New York Stock Exchange on that day. “I’m sure glad I held onto [the membership] for so many years. As it turns out, it was one of my best investments,” Carey says. “It was a lot easier financially back then to get a membership.”

His most memorable trade goes back to 1940, his first year on the floor, when traders drew charts by hand and people walked around with erasers updating quotes on chalkboards.

“I had only been trading for two or three months and it was at the time in Europe when the Germans overran France, and the news was very, very bearish and our market went down,” Carey says. “Wheat went down the limit one day and the next day it was sure to open lower. My father told me it was going to open lower and then it was going to bounce up. He suggested I grab something if I could on the lower opening. I grabbed [5,000 bushels] and sure enough it rallied and I took 4¢ out of that trade,” Carey says. He remembers that $200 winner very well because it gave his account some early breathing room. “That was a lot to make on a trade at that time for me.”

The trade was an indication of Carey’s penchant for risk as he points out that wheat was available in 1,000 bushel-lots at the time.

When deciding which trades to take, Carey would look at both technical and fundamental factors. “My main focus was studying the history of price movement, you look for what you think are opportunities,” Carey says, adding, “I would follow the weather [as well]. If you don’t have rain you don’t have crops. So dry weather means higher prices.”

Carey hadn’t been trading much more than a year when he was drafted in 1941. He served in the U.S. Army for four years starting out in the infantry before becoming a navigator. He was based in England and flew on 25 missions. The Chicago native returned to his south side neighborhood in late 1945 and went back to trading at the CBOT. He compares each army mission to trading, “It’s a challenge, to see in each case if your judgment is correct or not,” Carey says. “I was successful because I had to be, in the army and in trading.”

He attributes his success to an ability to keep his wits and discipline no matter what the outcome of a trade is. “You have to respect your capital and your risk.”

Carey says the amount of capital a trader has should determine the type of risk he takes on every trade. “If your money is low, you trade small, if it isn’t you can take bigger and bigger risks,” he says. Carey was not averse to taking on risk. “I’d say I took big risks in trading. I would take big risks and lose sometimes, but that’s part of the business.”

Carey made more money in 1947 than any previous year by taking advantage of a bull grain market caused by worldwide demand. “Europe, still devastated by the war, had just survived one of the worst winters on record and the United States had to pump money into Europe. It was the time of the Marshall Plan,” Carey says.

They weren’t all good years. In 1960 he briefly left the CBOT to go to the Chicago Mercantile Exchange’s floor to trade eggs because he saw fewer opportunities in grains. He was only there for about three months when the grains markets picked up and he returned to the CBOT never to leave it again for another exchange. After all, roots grow deep.

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