what is speculation 
in the world of finance speculation or speculative trading refers to the act of conducting a financial transaction that has substantial risk of losing value but also holds the expectation of a significant gain or other major value with speculation the risk of loss is more than offset by the possibility of a substantial gain or other recompense an investor who purchases a speculative investment is likely focused on price fluctuations while the risk associated with the investment is high the investor is typically more concerned about generating a profit based on market value changes for that investment than on long term investing when speculative investing involves the purchase of a foreign currency it is known as currency speculation in this scenario an investor buys a currency in an effort to later sell that currency at an appreciated rate as opposed to an investor who buys a currency in order to pay for an import or to finance a foreign investment without the prospect of substantial gains there would be little motivation to engage in speculation it may sometimes be difficult to distinguish between speculation and simple investment forcing the market player to consider whether speculation or investment depends on factors that measure the nature of the asset expected duration of the holding period and or amount of leverage applied to the exposure investopedia michela buttignol