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10 February 2023,09:38

Trading Blog

Techniques For Trading Bonds Futures

10 February 2023, 09:38

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Make More Informed Decisions While Trading Bonds

Explore the various techniques for trading bond futures and optimize your investment strategy. Learn about the different types of bond futures contracts, such as U.S Treasury bond futures and Eurodollar bond futures, and how to use them to hedge against interest rate risk. Understand the concepts of going long and short, and how to use leverage to potentially increase returns. Discover the benefits and risks of trading bond futures, and how to use technical analysis and market indicators to make informed decisions.

Forecasting Central Bank Interest Rates

Investing in bonds can be a great way to earn a return on your money, especially when you accurately foresee central bank policy and interest rates. Because bonds move inversely to interest rates, predicting when interest rates are increasing – such as when the Fed fund rate is increased in response to high inflation – is a way that investors use to trade bonds. To increase their chances, investors will closely watch data like Consumer Price Index, employment numbers, and the speeches given by the Federal Reserve chairman, for clues on U.S. monetary policy.

Find Out More About Bonds Trading

financial diagram with candlestick chart used in stock market analysis

Hedging Against Inflation

Hedging your investments is a way to protect your portfolio against potential downturns. Short selling government bonds can be a strategy to hedge against inflation and protect your real income earned from shares and bonds you already own. 

When inflation is high, the dividends and coupon payments of stocks and bonds lose value in real terms, negatively impacting the market demand and prices of these assets. By potentially profiting from the decrease in bond prices through short selling, you can offset some of these losses. Like all forms of hedging, while it manages the risk of your positions, it also caps the potential upside. 

Get Started With Bonds Trading

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