Sachs devotes more of its resources, tens of millions annually, to developing trading algorithms than it does on trade desk staffing. Trading algorithms may be as exotic as biology theorems like neural network applied to financial market trading by Gang Dong of Rutgers University, or completely based on current market time/price analysis. US tax advantages In the United States broad-based index futures receive special tax treatment under the IRS 60/40 rule. Stocks held longer than one year qualify for favorable capital gains tax treatment, while stocks held one year or less are taxed at ordinary income. However, proceeds from index futures contracts traded in the short term are taxed 60 percent at the favorable capital gains rate, and only 40 percent as ordinary income. Also, losses on NASDAQ futures can be carried back up to 3 years, and tax reporting is significantly simpler, as they qualify as Section 1256 Contracts. See also E-mini Dow futures S&P futures E-mini S&P Derivative (finance) Algorithmic trading 1256 Contract References External links Chicago Mercantile Exchange (CME) Nasdaq Futures Futures markets Nasdaq