If there is a way of making money, then it's stocks and bonds. There are people who are investing their hard earned money on various securities. Each day, thousands and millions of securities are sold and bought all over the world.
So, who is a speculator or an investor in stock exchange market? Well, a speculator buys and sells different types of securities with the ultimate purpose of making a quick capital gain as a result of price fluctuations in the stock market. On the other hand, an investor buys the securities with the ultimate purpose of generating regular income from the holding of securities. His ultimate purpose is coupled with safety investment.
Investors usually hold stocks and bonds for a long period of time. They earn dividends and interest as a reward.
Four Types of Speculators
A bull is a speculator who anticipates a rise in prices. She buys securities at the current price with the aim of selling them at a future date when prices rise. She buys long and creates pressure on the prices so that they increase. If her speculations go wrong, she spreads rumors that the prices are going to increase (she does bull campaigns also called rigging the market.) A stock market dominated by bull speculators is termed as bullish market.
A bear speculator anticipates a fall in prices. She enters into a contract to sell securities at the current price with the aim of buying them at a future date when their prices fall. She is a pessimist. If prices fall as per her speculations, she buys them back.
This is termed as selling short. Unlike a bull speculator who keeps her head upward, a bear speculator keeps her head down. She makes efforts of bringing prices down in the stock exchange market through selling pressure termed as bear raid. When her speculations go wrong, a bear squeeze occurs. If the bear speculators dominate the market, then it's termed as bearish.
3.) Lame Duck
A lame duck is a desperate bear speculator. She is desperate because she had committed herself in an agreement to sell securities to a buyer and the shares are unavailable in the stock market. The buyer is not willing to postpone the deal.
4.) A Slag
A slag speculator applies for securities with the aim that the prices of shares are going to be listed at a premium price on the stock exchange market. She eventually sells the securities when prices increase. She creates false demands by sending a number of applications under different names. A slag speculator is a premium hunter.