U.S. Treasury bond and note futures are a very liquid market for interest rate speculation and spread trading. Each of these exchange-traded contracts has a unique set of contract specifications for point value, expiration date, and are deliverable at settlement.
U.S. Treasury bond futures trading is where traders can actively buy or sell 2, 5, 10, and 30-year U.S. Treasury bond and note futures contracts in real time virtually 24 hours a day, through a well-regulated futures broker like NinjaTrader. U.S. Treasury bond futures offer traders direct trading exposure to these important highly liquid markets.
U.S. Treasury bond and note futures provide traders with many advantages and flexibility over trading or purchasing these same instruments in other ways. For example, U.S. Treasury futures can be traded on margin with much lower account capital requirements and traders can easily go long and short throughout the trading session.
Futures trading requires a funded account at a licensed futures broker like NinjaTrader. Traders can then buy and sell the desired futures contract by putting up a good faith margin deposit to cover potential losses.
Yes, you can trade U.S. Treasury futures with NinjaTrader. NinjaTrader is a well-established futures trading broker providing all the cutting-edge trading tools and services needed for both new and experienced traders to enter the global futures markets. You can place orders and analyze the U.S. Treasury Bond futures markets from multiple platforms including the award-winning NinjaTrader desktop platform and mobile app.
Trading U.S. Treasury bond futures comes with several potential risks and pitfalls to avoid. It is important for traders to always be aware of the factors that can affect the price of the futures they are trading in, and following a risk management plan should be a critical component of all trading strategies. As futures trading offers greater leverage for potentially increased profits, that leverage also increases the possibility of greater losses. Traders should only trade with risk capital. Risk capital is money you can afford to lose without affecting your lifestyle or changing your retirement horizon.
When trading U.S. Treasury bonds and note futures, you neither pay nor collect the interest from the underlying bond or note instrument.
Treasury bonds and notes can be purchased from several different venues; the primary platform for individual investors to purchase these securities is TreasuryDirect, operated by the U.S. Department of the Treasury. However, you can also buy bonds and notes from banks and brokers, and there is a secondary market where bonds and notes can be bought and sold. The minimum investment for treasury securities in the primary market through TreasuryDirect can be as low as $100. Trading futures provides a lower cost way to speculate on the price movement on bonds and notes.
The 6-month interest income payments earned from treasury notes and bonds are subject to federal income tax and are taxed at your regular income tax rate. However, a benefit of these instruments is that the interest income is exempt from state and local income taxes. Trading futures on these instruments offer additional tax benefits: trading profits on futures are taxed based on a 60/40 rule, where 60% of the profits are taxed as capital gains and 40% are taxed as regular income.
Before maturity, the value of a bond can increase or decrease depending on the current interest rates. For example, if interest rates have gone down since the time that a bond or note was first purchased, the bond or note with a higher interest rate will have increased in equity value. Holders of such bonds and notes can always sell these instruments on the secondary bond market for a profit or loss.