Meaning of speculators in stock exchange

Meaning of speculators in stock exchange

Posted: shaliko Date: 29.05.2017

Kinds of Speculators

When you make a financial commitment because you believe something will happen in the market where you're trading that will provide a profit, you are acting as a speculator. For example, you might invest in a bankrupt company because you expect that it will emerge from bankruptcy and its stock price will rise at some point in the future.

What is a Speculator? | Gold Eagle

Or you might purchase futures contracts or buy or sell options because you think the contracts might increase in value. In contrast, hedgers buy futures and options to protect their financial interests.

For example, a baker who buys a wheat futures contract in order to protect the cost of producing bread is hedging the risk that wheat prices will rise.

She's willing to spend a certain amount to protect against a potentially larger loss. The activities of speculators within a market may be either stabilizing or destabilizing, depending on whether or not they take a collective view about future price movements. For example, if some stock exchange speculators feel that the price of a share is going to rise while other speculators feel that the price of the same share is going to fall, then the former would seek to buy the share, adding to demand for it, while the latter would seek to sell the share, adding to the supply of it, and their efforts would cancel each other out, having little net effect on the share price.

However, if most speculators take the view that a share price will rise, then they will all seek to buy it and thus artificially add to the demand for it and force up its price; while if most speculators take the view that the share price will fall, they will all seek to sell it, artificially adding to its supply and forcing the price down.

Whether speculators reduce or accentuate fluctuations in share prices over time depends on whether their collective view about future prices parallels the underlying price changes or moves in opposition to them. For example, if a share price is rising, and speculators take a collective view that it will continue to rise, then they will seek to buy it in the hope of reselling at a higher price, and this buying will accelerate the upward share price movement.

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On the other hand, if a share price is rising, and speculators take a collective view that it will begin to fall in the immediate future, then they will seek to sell the share in the hope of buying it back later at a lower price, and this selling will slow down the upward share price movement.

Speculators operate in both SPOT MARKETS and futures markets and often make considerable use of OPTIONS in their dealings. For example, a speculator may purchase a share option that entitles him to buy a certain number of a company's shares at a predetermined price at some future date if he thinks that the share price will increase to more than the predetermined price plus the cost of the option, for then he can gain by exercising the option and immediately reselling the shares at the higher price.

See also ARBITRAGE , HOT MONEY , STAG , TOBIN TAX. All content on this website, including dictionary, thesaurus, literature, geography, and other reference data is for informational purposes only. This information should not be considered complete, up to date, and is not intended to be used in place of a visit, consultation, or advice of a legal, medical, or any other professional.

meaning of speculators in stock exchange

Speculator financial definition of speculator http: Dictionary, Encyclopedia and Thesaurus - The Free Dictionary 9,,, visitors served. A A A A Language: Register Log in Sign up with one click: Dictionary Thesaurus Medical Dictionary Legal Dictionary Financial Dictionary.

Tools A A A A Language: Free content Linking Lookup box. Speculator One who attempts to anticipate price changes and, through buying and selling contracts , aims to make profits. A speculator does not use the market in connection with the production, processing, marketing, or handling of a product. An investor who takes large risks in the hope of making large short-term gains.

Speculators often use technical analysis and other tools to make investment decisions on what securities to buy. They tend to buy stocks they believe will soon see a large growth in price and then sell them at the top of the market.

Speculators are controversial because some believe that they contribute to the creation of bubbles ; however, others believe that they provide liquidity necessary for the market to function. A person who is willing to take large risks and sacrifice the safety of principal in return for potentially large gains. Certain decisions regarding securities clearly characterize a speculator.

For example, purchasing a very volatile stock in hopes of making a half a point in profit is speculation, but buying a U. Treasury bond to hold for retirement is an investment. It must be added, however, that there is a big gray area in which speculation and investment are difficult to differentiate.

Please log in or register to use bookmarks. Write what you mean clearly and correctly. References in classic literature? Jarndyce had fallen into this company in the tenderness of his heart and his earnest desire to do all the good in his power; but that he felt it to be too often an unsatisfactory company, where benevolence took spasmodic forms, where charity was assumed as a regular uniform by loud professors and speculators in cheap notoriety, vehement in profession, restless and vain in action, servile in the last degree of meanness to the great, adulatory of one another, and intolerable to those who were anxious quietly to help the weak from failing rather than with a great deal of bluster and self-laudation to raise them up a little way when they were down, he plainly told us.

The Spaniards built these watchtowers on the hills to enable them to keep a sharper lookout on the Moroccan speculators. His transactions, huge and carefully thought out, were for his own aggrandizement only, and left always in their wake ruin and disaster for the less fortunate and weaker speculators.

STOCK EXCHANGE EXPLAINED IN 2 MINUTES

It sure beats faro," was his comment one day, when, after keeping the Dawson speculators in a fever for a week by alternate bulling and bearing, he showed his hand and cleaned up what would have been a fortune to any other man. The speculators in this new neighborhood have offered him I don't know how many thousand pounds for the ground that house stands on. All the time Fyne felt subtly in that man's manner a derisive disapproval of everything that was not lower middle class, a profound respect for money, a mean sort of contempt for speculators that fail, and a conceited satisfaction with his own respectable vulgarity.

meaning of speculators in stock exchange

The small boys, who are great speculators on the prowess of their elders, used to hold forth to one another about Williams's great strength, and to discuss whether East or Brown would take a licking from him.

They're not merchants, you know: Ill-bred and ill-informed, he had on his own showing fluked into fortune on a rise in land; yet cunning he possessed, as well as malice, and he chuckled till he choked over the misfortunes of less astute speculators in the same boom.

Even in the brains of the wildest speculators , there had sprung up no long rows of streets connecting Highgate with Whitechapel, no assemblages of palaces in the swampy levels, nor little cities in the open fields.

Speculation - Wikipedia

Al Frank's Value-Investing Newsletter, The Prudent Speculator, Now Available for E-Readers. Half of that came on just one day, when a speculator company snapped up all the petrol cargoes. More from Financial Dictionary.

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