Jack Broz was working in a California health club in the 1980s when he became acquainted with an options trader. He noticed that his new friend got off early, would work out and then go surfing.
“He got up in the morning, traded the options, made his money, then he was off to the gym and off to the beach,” Broz says. “That is what sparked me. Being naïve I thought, well, that is the type of lifestyle I want.”
Broz would quiz his friend about options and futures. “I asked him once about futures and he said, ‘no I won’t touch futures,’ so I figured that is where the real money must be,” he says.
Broz, who grew up in suburban Chicago, was thinking about moving back home and his new interest in trading clinched it.
“Chicago is where the futures industry is. I [could] get a job [at] the exchange and learn to trade; so that is how I got into it.”
He began in the pit as a market reporter at the Chicago Mercantile Exchange (CME) and began plotting his new career path. It was 1989 and the CME offered trading classes for all its employees. “They had a bevy of courses that were free: Market Profile, Pit Trading, Technical Analysis…I thought this was perfect. I will take all these courses [and be around] traders all day,” Broz says.
After a few years he was able to lease an IDEM (Index, Debt and Energy Market) badge, which allowed him to trade the Treasury complex at the Chicago Board of Trade during its night session. He traded night bonds for a couple of years and in 1997 the exchange launched futures on the Dow Jones Industrial Average. These were available for IDEM holders, so Broz moved to the Dow, but it was a tough transition.
The Dow was a very thin market that traded in 10-15 tick increments at the start. “People said you are risking $10 a trade, but you weren’t; the risk was $150 a trade. If you were long, it was $150 a trade. For a new guy that is a lot.”
What Broz picked up from his trading courses was a basic understanding of technicals. “What I had to do [was] create my own edge. I would look for support/resistance levels and when the market bounced off of that, I made money,” he says.
Broz then got a break working with a new proprietary group put together by Ron Manaster at Eagle Market Makers to arbitrage between the pit and electronic contract. That allowed him to move to the top step because he was trading larger size.
“We would do 10-lots if we had an edge. I [was] on the top step now next to brokers,” Broz says. “It is different up there. Guys will look at you. They start taking you out, they start helping you with stuff.”
What it did for Broz was give him the confidence to compete with the big traders who used to intimidate him. “It gave me the confidence that these guys weren’t all geniuses, which is what I [had] thought,” Broz says. “I thought I was overmatched, these guys are smarter than me, they know more than me, they have more money than me. Once I got to the top step, I realized that none of that was true, they just [had] the guts to trade. That confidence is what helped me the most.”
About the same time, traders started to notice Broz doing well and wanted to know more about his technical work.
“Word of mouth started [getting] around the floor and I [began] to get some pretty big traders from the 10-year futures, bond futures and even five-years asking to look at my stuff,” Broz says. “I [was] starting to rub shoulders with big traders, guys who were trading 500 lots on the top step of the 10-year pit and they were using my stuff to help their own trading.”
His technique is based on Gann, but it has his own take on it. “I will take what happened this week, what happened this month, what happened this quarter, what happened this year, what happened since the contract went on the board and I just break it down,” Broz says. “It is not the prototype Gann, it is a tweak to it that I came up with. From there I will look at my daily charts, I’ll look at both the electronic and pit sessions and look for old highs and old lows that acts as targets.”
His technical work grew into a successful newsletter business called the Marlin Letter. “I said to myself, I am not that great of a trader because I was too afraid but maybe I could sell this stuff and make some money,” Broz says. “But even with that I would charge $50 a month and guys would come up to me and say you were right on today. They were making $1,000-$2,000 and here I am making$150, what’s wrong with this picture?”
Successful bond traders would tell Broz the secret of trading was to “get a process that works and trade the process; the money will take care of itself. You have good stuff, so just trade your stuff.”
And he did. As Broz’s confidence grew, he concentrated on trading and only keeps up his consulting work — now called TradeBondFutures — for about 100 professional traders.
“When I became a better trader I thought about stopping the business and a few of the guys who said trading is a process said maybe it is helping you trade better.”
So he kept it, but his main focus is trading and his confidence is high.