Russell 2000 ETF
tracking russell 2000 index
How to make money trading small cap ETF with leveraged etf and ultra short etf shares
Russell 2000 etf is one of index ETF I track for possible trading opportunities. The small cap ETF is tracking small cap companies which are mostly growth companies.Most of the time I track Small cap ETF with stock market symbol IWM as my favorite choice. This exchange traded fund is issued by Ishares ETF provider. But there are also several leveraged etf shares tracking russell 2000 etf index and also short etf shares tracking this index.
Basic rules for Small cap ETF trading strategy
I use technical analysis a lot. There is one important tool in technical analysis which helps me clarify ideas for trading. It is
relative strength
analysis.This type of
stock chart analysis
I use also to understand situation with small cap ETF shares. First question is if current stock index chart situation is bullish, bearish or neutral. I compare chart of IWM with broad stock index chart of SPY (S&P 500 index ETF).
The situation is now neutral on these charts. Both index etf shares are near their 200 moving average on strong horizontal
support level
which could be seen on
weekly charts
. I would prefer to stay out and do not trade russell 2000 etf now. I have noticed on the chart of small cap etf that it is now slightly stronger then SPY etf. You can notice it as SPY is back on its 200 moving average but Rusell 2000 etf is now close to its 50 moving average and much higher above 200 day moving average then SPY. My strategy would be that I would wait for IWM to move above 50 day moving average and then go long with IWM . I would also consider using leveraged etf like Ultra Rusell 2000 etf by Proshares.
Leveraged Short ETF shares for Small cap ETF Trading
I would not trade short ETF for this small cap index and the situation is not so bearish yet. But if IWM will be ready to break under 77 - 77.50 support level then I would prefer to trade short sell side as this ETF will be definitely in bear down trend.
Leveraged Ultra Short ETF like Ultra Rusell 2000 ETF with symbol TWM or only Short Rusell 2000 ETF with symbol RWM could be good choice how to participate in such trend. And I noticed that there is also 3x leveraged Ultra Short Rusell 2000 EWM with symbol SRTY. To enter such bearish trade we have to be long these Ultra Short ETF shares.I would like to notice that these
leveraged and short ETF
shares have often some carrying costs and they are not good for long term holding. They are better for swing trades and position trades for days or weeks.
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