However, since the S&P SmallCap 600 tracks less than one-third of the number of companies in the Russell 2000, it provides a much narrower understanding of the small-cap market as a whole. Like the S&P 500, many economists consider the Russell 2000 a reasonably accurate barometer of the U.S. economy, particularly as it applies to smaller companies. Discover the range of markets you can trade on – and learn how they work – with IG Academy’s online course.
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- The Russell 2000 Index is a collection of US stocks you can get exposure to with us.
- Of course, the best learning is by doing, too – which is why you can open a demo account with us, for free.
- The Russell 2000 is a stock market index that tracks the performance of 2,000 small-cap U.S. public companies.
- If you’re ready to open your first position, you can click on ‘place deal’ in the deal ticket.
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While the Russell 2000 is designed as a barometer of small-cap stocks, there are some subindexes composed of stocks in the Russell 2000. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated coinsmart review podcasts, and non-profit The Motley Fool Foundation. You can trade the Russell 2000 index on the spot with continuous, real-time pricing as a cash index. You can also trade it with futures to open a longer-term position speculating what the index’s price will do at a future date. You can trade the Russell 2000 Index with us by speculating on the performance of the index as a whole via derivatives like CFDs.
Should You Invest in the Russell 2000?
In all, 56 companies were added to the Russell 1000 in 2021, with 30 of them moving up from the Russell 2000. The Russell 2000 is designed to provide the best indicator of how small-cap U.S. stocks are doing. Emily Guy Birken is a former educator, lifelong money nerd, and a Plutus Award-winning freelance writer who specializes in the scientific research behind irrational money behaviors.
The risks of loss from investing in CFDs can be substantial and the value of your investments may fluctuate. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how this product works, and whether you can afford to take the high risk of losing your money.
In simple terms, if a company gets too large, it will be removed from the Russell 2000 index. In turn, it will likely be placed in the Russell 1000 index, which is designed to be a barometer of how large-cap stocks are doing. You can also set up trading alerts, so that you’re notified if there’s any changes in market events. Note that it’s your responsibility to monitor your trades, and you shouldn’t rely solely on alerts for any updates on your position.
What are stock market indexes?
The Russell 2000 is a diverse index made up of many very different companies across several sectors. Sectors represented in the index include financial companies, healthcare, industries, technology, energy and real estate, among others. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services.
Choose your position size and manage your risk
You can go long or short on (buy or sell) the index’s underlying market price without taking ownership of any assets outright. The largest company in the Russell 2000 index has a market cap of roughly $10 billion. For comparison, the S&P SmallCap 600 covers approximately 2.5% of the U.S. stocks by market cap whereas the Russell 2000 covers about 10%. You can always perfect your strategy by opening a demo account for free and trading in a risk-free virtual space. With us, you can gain exposure to the Russell 2000 via trading, and you’ll decide on which type of position to open depending on your personal preferences.
Exchange-Traded Fund (ETF)
However, with that greater potential for risk comes built-in greater potential to grow exponentially. It’s easier, after all, to double your value when your stock is worth $10 than when it is worth $100. The Russell 2000 Index is a collection of US stocks you can get exposure to with us. It can be thought of as the world’s ‘biggest small index’, tickmill review as it’s comprised of America’s top small-cap stocks by market capitalisation. The Dow Jones Industrial Average is a stock index that tracks 30 of the largest U.S. companies. Created in 1896, it is one of the oldest stock indexes, and its performance is widely considered a useful indicator of the health of the entire U.S. stock market.