What Is A Russell 2000 Index Tracking Stock?

Several people have recently asked me what a Russell 2000 Index tracking stock was, so I thought I'd briefly cover this.

The Russell 2000 Stock Index is a great market to trade as it tends to trend regularly and often has multi point moves many times during any given trading week.

Many people use Index options and Index futures to trade this index, but unfortunately futures and options have caused many traders to come unstuck. That's where trading an Russell 2000 Index tracking stock can be a great alternative.

You can simply buy one stock and get exposure to the entire index, without the massive leverage (and associated risk) of futures or options contracts.

So, what is the Russell 2000 index and why would you want to trade it?

The Russell Index covers 2000 small cap stocks and while it can be volatile, it is an ideal market for traders once they know how to enter and exit safely.

Below we have a daily chart of the Russell Stock Index...

Russell 2000 Daily Stock Index Chart

Even though this chart doesn't show us a strongly trending market, it was great up-trend that continued for many months. 

If you are more of a day-trader, the Russell Stock Index can give you regular opportunities to enter and exit trades just about every day, and you can trade the a Russell 2000 Index tracking stock to capture these moves either intra-day or for position trades.

Here is an intra-day example of a recent short-term run down in this index...

Russell 2000 Intra-day Stock Index Chart

Lower tops and bottoms - an easy down-trend to capture, once you know what to look for.

And here is a longer term intra-day rally (using a 15 minute chart) showing a 14 point rise in the Russell 2000 Index.

Russell 2000 15 Minute Stock Index Chart

The key question is, how do you know when the Russell Stock Index is going to trend like this so you can get on board?

And what does a high probability trade setup in the Russell look like? It's one thing to be able to trade a Russell 2000 Index tracking stock, but it's another thing altogether to make a profit doing it...

To get you started on your way to becoming a professional Russell Stock Index trader, grab a subscription to our brand new 5 day Futures Trading Mastery Course.

You'll learn the 5 key ingredients to successful trading and how to apply them to the Russell and any other futures market, no matter what your current level of skill.

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