Speculator

Speculator comes from the lain word “speculari”, which means “to spy out”.  Some famous traders believe that speculators “observe” the market and its movements to make their trading decisions.

Speculators usually buy or sell securities based on price movement or any other number of reasons, compared to investors who are usually in a security for a fundamental reason(like, solid earnings etc). Speculators usually engage in high-risk securities and high-risk acvities like options trading, margin trading etc.

Speculators are often blamed for market excesses but this is only somewhat true.  Speculators are essential to the financial markets as they provide liquidity. The futures market was designed to let corporations hedge future costs, but without speculators, there’d be no one on the other side of the trade! Thus, speculators do play a key role in keeping the market going.