A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
The taking of relatively high risks and the acceptance of the possibility of losses in the hope of making large gains. It may involve the purchase or the short-selling of securities or assets in the hope of profiting from relatively short term price changes. Speculators normally, though not always, have no professional interest in the securities or assets they trade in. Speculation can be contrasted with investment which is the long term purchase of assets or securities in the hope of income and capital appreciation. Speculation is sometimes referred to in a pejorative sense. However, speculative trading adds capital and liquidity to financial markets and in normal times reduces price fluctuations. But in periods of economic or political crisis it is likely to exaggerate market movements.
See also: Arbitrage