What is Speculation ?
One of the terms most frequently encountered by people who have invested their savings and investments in the stock market is the term speculation. The term speculation is one of the most frequently used words in daily life. Although I have no idea whether it is used consciously or unconsciously, it is one of the terms I hear very often. It is especially common in news programs, discussion programs and economy bulletins on television. As a sociologist, it is a term that is frequently used in philosophy classes, speculation.
While it has the meaning of diversion in the discipline of mathematics, it means fiction in general terms in philosophy. It is used as the meaning of change in the economy. The term speculation is mostly used in the field of economics today. It is a term that economists use very often in their speeches.
Speculation is a way of earning profits by taking risks and taking into account the expectations formed as a result of the evaluation of today's market conditions. It is the task of determining future price indices, taking into account the current conditions of today. Prices rise or fall as a result of the determinations made. The main purpose here is to ensure that investment instruments traded in the stock market are bought at the lowest price level. At the same time, it is to earn a high profit from the difference by placing a sell order at the highest level.
Speculation is today perceived as a crime. However, this term does not fall within the concept of crime. Contrary to what is thought, the reasons for the existence of markets and stock exchanges encourage individuals to do this work. By encouraging individuals in this direction, it is aimed that each security reach the price it deserves. This term does not always provide a profit rate to its investors. It happens when investors make a loss. People who want to make a profit and achieve success in this field should have at least basic knowledge.
I would like to continue by giving concrete examples of the concept of speculation. For example, let's take 2 automotive tire manufacturer companies traded in the stock market. The sales and profit rates of the stocks of these two manufacturers increase every year on the date of transition to winter tire application. Therefore, it is normal for stocks to rise. This is positive speculation. Investors, on the other hand, will buy the stock at a time suitable for this period, if they think through this situation and deem it appropriate.
Let's continue with the definition of this term. It is the execution of buy-sell transactions with the help of an investment channel with the expectation of a certain value by assuming a certain risk with the expectation of profit return in the future.
What is a Speculator?
A speculator is a person who makes transactions to profit from speculation. In order for a person to be called a speculator, that person must have reached a certain level in the field of stock market. There are also those who define it as a person who takes on certain risks. Speculators are people who determine the risks they will take in their transactions. These are the people who continue their buying and selling transactions by following and interpreting the current markets. The people who correctly determine the trend movements of the price movements, thanks to their knowledge, are called speculators.
The presence of speculators is very important. Because these people increase the transaction volume. At the same time, the liquidity ratio is also increasing. When this is the case, the increase in cash in the market accelerates. As a result, expectations can be met. A speculator is someone who buys securities at an affordable price and then sells them higher than the purchase price over time. It buys securities when it thinks it is the cheapest and sells it when it thinks it is the highest. He is a risk taker relying on his knowledge and ability to evaluate information.
The existence of speculators satisfies the supply and demand of other investors seeking hedging. The absence of speculators reduces the liquidity ratio in the market. At the same time, it does not meet the supply and demand of market investors. Some value attempts by speculators can lead to price imbalances. But they ensure that the difference between forward and spot prices remains within a certain range.
Speculation types are generally divided into two. Speculation types consist of two types based on supply and demand news and price trend forecasting.
Based on Supply and Demand News: I said there are two types of speculation. This topic is divided into two in itself. The first of these is price level traders. News, documents, etc. to help them evaluate the price level. they are dealing with. The other is the news merchant. They are interested in news that signals the changes in supply and demand that investors expect. In both of them, they do not work in stock market halls in order to hide their information from other investors. They continue their business in their personal offices.
Based on Price Trend Forecast: Like other types of speculation, it is divided into two under this heading. The first of these is people who make short-term purchases and sales. Those who perform their transactions in time intervals such as a few minutes are included in this category. Those in this category buy when the price drops, and sell immediately when it rises in a short time. Profit rates are low as their holding period is short. The other is position traders. They are the ones who hold their positions for a long time. If they believe the price of a product will drop, they sell futures contracts. If their expectations go the way they want, they make a profit through reverse trading.
