what is a speculator 
a speculator utilizes strategies and typically a shorter time frame in an attempt to outperform traditional longer term investors speculators take on risk especially with respect to anticipating future price movements hoping to make large gains to offset the risk speculators exert control over long term risks by employing various strategies such as position sizing stop loss orders and monitoring the statistics of their trading performance speculators are typically sophisticated risk taking individuals with expertise in the markets in which they are trading understanding speculatorsspeculators attempt to predict price changes and extract profit from the price moves in an asset they may utilize leverage to magnify returns and losses although this is a personal choice of the individual there are different types of speculators in a market for example individual traders can be speculators if they purchase financial instruments for short periods of time with the intention of profiting from their price changes market makers can also be considered speculators because they take the opposite position to market participants and profit from the difference in bid and ask spreads prop shops or proprietary trading firms can also be considered speculators because they use leverage to purchase securities and make profits from changes in their prices normally speculators operate in a shorter time frame than traditional investors for example a person may call themself an investor if they buy 20 strong companies and plan to hold those stocks for at least 10 years assuming the companies continue to perform well a speculator on the other hand may use all their portfolio capital to buy five stocks or several futures contracts expecting them to rise over the next few days weeks or months speculators typically utilize trading strategies that tell them when to buy when to sell at a loss or profit and how big of a position to take principles behind speculationspeculation sometimes gets confused with gambling there is an important distinction though if a trader is using untested methods to trade often based on hunches or feelings it is highly likely they are gambling if gambling the trader is likely to lose over the long run profitable speculation takes a lot of work and with proper strategies it is possible to gain a reliable edge in the marketplace profitable speculators look for repeating patterns in the marketplace they look for commonalities between many rising and falling prices in an attempt to use that information to profit from future ups and downs in prices it is detailed work and because prices are always moving and there are nearly infinite variables to consider each speculator often develops their own unique way of trading speculators impact on the marketif a speculator believes that a particular asset is going to increase in value they may choose to purchase as much of the asset as possible this activity based on the perceived increase in demand drives up the price of the particular asset if this activity is seen across the market as a positive sign it may cause other traders to purchase the asset as well further elevating the price this can result in a speculative bubble where the speculator activity has driven the price of an asset above its true value the same can be seen in reverse if a speculator believes a downward trend is on the horizon or that an asset is currently overpriced they sell as much of the asset as possible while prices are higher this act begins to lower the price of the asset if other traders act similarly the price will continue to fall until the activity in the market stabilizes in this way even many investors become speculators from time to time they get caught up in the frenzy of the big ups and downs while they may have initiated their position with the intention of being long term investors if they start to buy and sell solely because they think other people are buying or selling they have entered the realm of speculation possibly even gambling if they are unsure of what they are doing as opposed to investing 