Russell 2000 brokers allow clients to trade stocks and exchange-traded funds (ETFs) from the small-and medium-cap equities market in the US. Launched in 1984, it forms a part of the Russell 3000 index which acts as a benchmark for more than $9 trillion worth of assets. This guide will detail how to choose Russell 2000 brokers alongside information on historical prices, average returns, live charts, and listed constituents.
Russell 2000 Brokers
These are the 2 best brokers for trading on the Russell 2000:
#1 - Interactive Brokers
Interactive Brokers is a leading global brokerage that provides access to a comprehensive offering of stocks as well as forex, futures, metals, bonds and cryptos. The firm has over 40 years experience in the online trading industry and is heavily regulated by SEC, FCA, IIROC, and SFC. Traders use the proprietary Trader Workstation and can access powerful tools and data feeds as well as comprehensive educational resources.
"Serious traders seeking a regulated broker with unparalleled access to stock markets should look at IB. Their range of stocks can't be beaten."- DayTrading Review Team
- Instruments: CFD, Forex, Stocks, Crypto, Futures, Options, Commodities
- Regulator: SEC, FCA, IIROC, SFC
- Platforms: AlgoTrader, OmniTrader, eSignal, TradingCentral
- Min. Deposit: $0
- Min. Trade: $100
- Leverage: 1:50
- Regulated by some of the world's most reputable bodies including in US
- Gives retail traders unmatched access to global stocks with tens of thousands available from 100+ market centres in 24 countries
- Diverse payment options and account currencies
- Mediocre customer support
- Platform and web interface are complex and difficult for beginners to pick up
- Due to the pricing structure, this firm can be more expensive for aggressive traders who trade over $100,000 shares a day
#2 - IG Group
IG is an award-winning broker that has an excellent reputation globally. The brand-US offers spread betting, CFD and forex trading across a comprehensive suite of markets. IG is also multi-regulated, provides a great trading app and has 50 years experience.
"IG offers a superb all-round package. Beginners will appreciate the user-friendly web platform and secure trading environment while established investors will rate the 17,000+ markets and top-tier market research."- DayTrading Review Team
- Instruments: CFDs, Forex, Stocks, Indices, Commodities, ETFs, Futures, Options, Crypto, Spread Betting
- Regulator: FCA, ASIC, NFA, CFTC, DFSA, BaFin, MAS, FSCA
- Platforms: MT4, AutoChartist, TradingCentral
- Min. Deposit: $0
- Min. Trade: 0.01 Lots
- Leverage: 1:30 (Retail), 1:250 (Pro)
- Users have access to a comprehensive range of charts, market news, client sentiment data, and analysis tools
- Share dealing and ISAs are available for longer term investing
- Over 17,000 assets are available spanning stocks, forex, commodities, baskets, futures, options and more
- No copy trading platform
- Inactivity charge
How To Compare Russell 2000 Brokers
- Trading Vehicles – Russell 2000 brokers offer different methods of trading. Long-term, buy-and-hold investors may prefer a vehicle such as an ETF that tracks the Russell 2000’s performance, while day traders often prefer leveraged derivatives like CFDs.
- Fees – Most Russell 2000 brokers charge for their services through commissions as a percentage of each trade and/or through the bid-ask spreads. Additional charges include deposit and withdrawal fees, subscription costs for different account types and any extra features. Also take into account swap fees if you hold positions overnight with products like CFDs.
- Trading Platform – The platform is where you will analyze listed companies and execute trades. Popular solutions include MetaTrader 4 and MetaTrader 5, which are two leading platforms with many in-built indicators and tools to support analysis.
- Tools – You should evaluate how Russell 2000 brokers can support your online trading. This includes education and insights into small-cap US companies. Often, brokers will host experts and trading analysts that post opinions and reviews on Russell 2000 securities as well as future price trends.
- Customer Service – Look at the broker’s customer support options as quick and effective assistance is key if you experience issues, especially when day trading. The best Russell 2000 brokers will offer contact options such as live chat and a phone hotline.
- Regulation – Russell 2000 brokers that are regulated are generally more trustworthy than those without licenses. For example, brokerages licensed by the Financial Industry Regulatory Authority (FINRA) in the US must be truthful in their adverts and provide disclosures about potential investments. To verify a broker is regulated, you can check their license number with the regulatory body’s directory.
What Is The Russell 2000?
The Russell 2000 is a stock market index that tracks the value of 2000 of the smallest publicly tradable companies in the USA. Alongside the Russell 1000 index, it forms the Russell 3000 index, which comprises more than 95% of all tradable equity on the US stock market when measured by market capitalization. Just over half of all companies in the Russell 2000 index are from the financial, industrial or healthcare industries.
While two-thirds of the companies in the Russell 3000 index are in the Russell 2000 index, the Russell 2000 only accounts for around 7% of the Russell 3000’s total market cap. This is because the components of the Russell 2000 are small and mid-cap stocks ranked using float-adjusted market cap. Float adjusted means the ranking takes into account the current shares in a company that are available to be publicly traded.
There is a wide range of market cap sizes making up the Russell 2000 as there is no exact definition of the market cap range for small and medium-cap stocks. At the time of writing, the largest market cap of a company on the index is just over $10.5 billion and the median average across the index is around $1 billion.
The Russell 2000 index was founded in 1984 by the Frank Russell Company, an asset management and investment firm. It was the first real way to gauge the strength of so many small and medium-cap companies in the US at once. Nowadays, the index is run by the Financial Times Stock Exchange (FTSE) Russell Group and has grown to become a popular method of gauging the health of the entire US equities market.
With the ticker symbol RUT, you can follow live price quotes and look at history charts for the Russell 2000 on websites such as MarketWatch and Yahoo Finance. The best brokers with access to the Russell 2000 also have charts showing time frames ranging from the past few days up to several years ago. The top platforms may also contain fact sheets detailing P/E ratio history, average historical returns, annual returns by year and the total return and dividend yield since the index was launched.
- 1984 – The Russell 2000 index was created
- 1987 – All-time record low of 106.08
- 1989 – First mutual fund based on the Russell 2000 index is launched
- 2013 – Surpassed a value of 1,000
- 2015 – Merger between FTSE and Russell Investments to form the FTSE Russell Group
- 2020 – Surpassed a value of 2,000
- 2021 – All-time record high of 2,442.74
The Russell 2000’s listings can change each year as companies’ fortunes change and new organizations go public.
For a company to be included in the Russell 2000, it must satisfy the following criteria:
- Be a part of the Russell 3000
- Have a market cap of at least $30 million
- Have a lower float-adjusted market cap than all companies in the Russell 1000 index
- Be a publicly traded company
- Traded on the NYSE, NASDAQ, ARCA, NYSE American or CBOE
The opening hours for the index depend on the instrument and exchange you are trading. For instance, futures on the E Mini Russell 2000 index from the CME Globex are tradable between Sunday 6 PM until Friday 5 PM (ET) with a 15-minute break each day starting at 4:15 PM.
Many of the stocks you can trade with Russell 2000 brokers are traded on the NASDAQ, for which the market operating hours are as follows:
- 4 AM until 9:30 AM (ET) – Pre-market trading session
- 9:30 AM until 4 PM (ET) – Core trading session
- 4 PM until 8 PM (ET) – Post-market trading session
However, bear in mind that online Russell 2000 brokers may set their own trading hours.
What Companies Are In The Russell 2000?
There are companies on the Russell 2000 from a wide range of industries such as technology, energy and utilities. As of 2023, the following are the top ten biggest constituents by market cap in the index:
- Iridium Communications (IRDM)
- Matador Res Co (MTDR)
- Crocs Inc (CROX)
- Saia Inc (SAIA)
- Inspire Medical Systems (INSP)
- Emcor Group Inc (EME)
- RBC Bearings Inc (RBC)
- Halozyme Therapeutics (HALO)
- Texas Roadhouse Inc (TXRH)
- Shockwave Medical (SWAV)
How To Start Trading The Russell 2000
Select An Instrument
There are several ways to trade the Russell 2000. Among the most popular are:
The index is made up of companies from a range of different stock exchanges, so if you want to trade individual stocks you will need to ensure your Russell 2000 brokers provide access to at least one of these.
When selecting the stock or stocks to trade with Russell 2000 brokers, you need to consider volume vs volatility. The trading volume of an asset relates to how many shares of a company are being exchanged over a given time. It is a key metric because it gives an idea of where future price movements could be. For instance, if there are more people investing in a given stock at one time, the price is considered more likely to move and by a larger amount. A by-product of having so many other investors placing buy and sell orders is that there is lower slippage as orders are filled faster. Additionally, the bid-ask spreads are likely to be tighter too.
You also need to account for the volatility of a given stock tradable through Russell 2000 brokers. Volatility relates to how hard it is to predict the frequency and the size of swings in the value of a stock, which can be taken advantage of to generate returns. Generally, during times of low volatility, the price of a stock is not expected to see large fluctuations in price, meaning there may be less opportunity to generate returns. On the flip side, higher volatility stocks are often more attractive for day traders as there are more chances to capitalize on price action with the swings happening so often. The drawback is the added risk as the price can easily swing unfavorably, putting you in a losing position.
An exchange-traded fund (ETF) is a collection of assets, typically stocks, that is tracked and traded as a single security. As the name suggests, they can be traded on exchanges, making them easy to access for clients of Russell 2000 brokers.
There are ETFs that track the price of the Russell 2000 by investing in some or all of the index’s stocks. For example, the iShares Russell 2000 ETF which can be traded on the NYSE ARCA is made up of 1,943 of the index’s holdings. Other viable investment options include the SPDR Russell 2000 small-cap ETF, the Xtrackers UCITS ETF, the Vanguard ETF Growth Index Fund and the Fidelity Index Fund. Another popular option is the iShares Russell 2000 Small-Cap Index K which is similar to the Russell 2000 index but it has different sector weighting and so the growth in value can vary.
If you feel that the ETFs that track the performance of the Russell 2000 index closely produce insufficient returns, you can instead invest in leveraged ETFs. Examples include the ProShares Ultra ETF and ProUltra which leverage the Russell 2000 index by 2x and 3x, respectively.
Alternatively, you can invest in inverse ETFs such as the ProShares Short and UltraShort Russell 2000. These are ETFs that track the Russell 2000 with a -1x and -2x inverse multiplier, allowing clients to profit from a decline in the value of the entire index.
Derivative products are a popular way for retail traders to speculate on price movements, with many Russell 2000 brokers offering products that allow them to take advantage of leverage through margin trading.
Derivatives can be traded on individual stocks, ETFs that track the Russell 2000, or using the Russell 2000 index itself as a basis for trades through brokers like eToro. Some of the most popular Russell 2000 derivatives are listed below:
- CFDs or contracts for difference, allow traders to make leveraged bets on price movements without actually buying or selling the underlying security
- Futures are one of the classic forms of derivative, in which the contract buyer has the right to buy or sell an asset for a specified price at the end of the contract. The profit or loss is the difference between the real market value of the asset and the price specified on the contract.
- Options work in a similar way to futures, except that the contract buyer has the right but no obligation to proceed with the transaction when the contract ends. This protects the trader from large price movements that would lead to extreme losses – if the trade ends out of the money, the only loss will be the premium paid for the contract.
- Binary options are a derivative popular with some retail traders because they are straightforward – no assets are bought and sold, and the trade hinges on the simple question of whether an asset’s price will rise or fall. Potential profits or losses are also calculated before the contract begins.
Develop A Strategy
Adopting a strategy is the best way to turn your investments with Russell 2000 brokers into consistent profits. Day trading involves a lot of emotion. Developing a strategy can help you to stay disciplined as you follow a methodical way of investing and avoid rushing into trades. This could involve using certain technical indicators to confirm trends or limiting investment size to reduce risk exposure.
Research Companies & Markets
A good first step is to research the companies with the highest market capitalization as these will have the biggest influence on price movements. You should also take note of the largest markets and sectors represented on the index and research factors that influence these when developing your strategy.
Find A Niche
The index tracks just under 2000 stocks, so finding a niche is another way to streamline the trading process. Whether this is concentrating on a single industry or on certain stocks such as the top 10 by market cap.
There are many stocks you can invest in and many ways in which you can trade so it can be easy to be overwhelmed with too many choices. It may be best therefore to focus your time and effort on just a few securities. By doing so, you learn more about certain companies which can help you to make better predictions on future price movements.
Practice With A Demo Account
Demo accounts with Russell 2000 brokers are a good way to practice trading. This is especially important if you are unfamiliar with the platform, strategy or stocks you are trading with.
The best brokers with access to Russell 2000 will offer a free paper-trading account with plenty of simulated funds so you can build up experience with the index.
Use Available Resources
To help you stay educated or discover new strategies for trading the Russell 2000, you can use the many resources available online. For example, trading classes, books, ebooks, PDF guides and tutorial videos. Additionally, you can find advice from other investors on forums and communities on websites such as Reddit, Facebook and Discord.
Many Russell 2000 brokers also support trading services such as expert advisors (EA). These are algorithmic trading robots that implement instructions you provide to execute trades. Using an EA is no guarantee you will produce winning results as the bot is simply executing the strategy provided, but it can help to execute a greater number of trades. An EA is particularly useful for day traders that want to enter and exit many positions in a short space of time.
An economic calendar is a useful tool that can help you to keep track of important events and news that could impact your portfolio and investments. You can make notes of key dates relating to companies you are investing in. For instance, annual general meetings and expected publications of reports on performance.
Also, make sure you mark significant dates relating to the Russell 2000 index such as the annual reconstitution. All Russell indices are recalibrated annually to accurately reflect the US equities market. For example, if a company’s market cap grows too large for the Russell 2000, it will be moved up to the Russell 1000 index. The reconstitution always happens in June, but the exact dates may vary each year. Furthermore, track the dates when new eligible IPOs are added to the index, which happens each quarter.
Keep A Journal
Using a trading journal to keep track of your trades is helpful for monitoring and improving your performance. This can be done using a physical journal or with software such as Excel and bespoke programs. When you open a position, make a note of the asset, entry price and time as well as details such as why you executed that trade.
Then, after closing, input the exit price and time, the result, the profit or loss and why you exited your position at that time. This information will help you to self-reflect and review your own performance over time.
If you use Excel, you can generate graphs and charts to visualize your performance over time. Certain Russell 2000 brokers allow their clients to export their trading history into a CSV file making it easier to monitor trades in Excel. There are also some dedicated trading journal apps like Edgewonk and TraderSync that automate the journaling process and provide additional analysis tools.
Final Word On Russell 2000 Brokers
The Russell 2000 is a popular index due to its status as a benchmark for the performance of the US equities market. Through Russell 2000 brokers, clients can spot trade as well as open derivatives such as futures, options and CFDs on a range of stocks. Register with one of the top-rated Russell 200 brokers to get started.
What Stocks Are In The Russell 2000?
There are around 1,950 stocks in the Russell 2000 index. You can find a full list of all companies in the Russell 2000 index on the FTSE Russell website. Some of the index’s top holdings by market cap include Iridium Communications, the Matador Res Co and Crocs Inc.
What Is The Russell 2000?
The Russell 2000 is an index that tracks 2000 small and medium-capitalization-sized companies in the US. It is often seen as a good way to evaluate the US economy as it accounts for so many small and medium high-growth stocks. You can trade on the Russell 2000 through one of the many listed stocks or through ETFs such as Global X Russell 2000 Covered Call ETF and the Schwab Index Fund.
Are Russell 2000 Brokers Regulated?
Many of the best Russell 2000 brokers hold licenses with regulatory bodies such as the Financial Industry Regulatory Authority (FINRA) in the US or the Financial Conduct Authority (FCA) in the UK. You can confirm if a broker is regulated by checking the license number on the regulator’s database.
How Do You Short The Russell 2000?
You can either take a short position with a CFD or by opening a put options contract. Another way is to trade against the Russell 2000 by investing in inverse and leveraged short ETFs such as the ProShares Short Russell 2000 -3X ETF.
Are Russell 2000 ETFs The Best For Trading?
To determine if the Russell 2000 is the best ETF for trading you should compare it with other index ETFs. For example, the S&P500, S&P600, NASDAQ index, Russell 1000 and Russell 3000. To do this, consider factors such as historical returns, volatility and performance forecasts.
Where Can I Track The Russell 2000 Index?
Websites such as Yahoo Finance and MarketWatch are good options for tracking the Russell 2000 index with the symbol RUT. Both sites provide useful information on instruments such as futures and ETFs with lists detailing recent contracts. The top Russell 2000 brokers also offer live price charts and graphs with the latest data on the index.