[spek-yuh-ley-shuh
n] 
| 1. | the contemplation or consideration of some subject: to engage in speculation on humanity's ultimate destiny. |
| 2. | a single instance or process of consideration. |
| 3. | a conclusion or opinion reached by such contemplation: These speculations are impossible to verify. |
| 4. | conjectural consideration of a matter; conjecture or surmise: a report based on speculation rather than facts. |
| 5. | engagement in business transactions involving considerable risk but offering the chance of large gains, esp. trading in commodities, stocks, etc., in the hope of profit from changes in the market price. |
| 6. | a speculative commercial venture or undertaking. |
| spec·u·la·tion (spěk'yə-lā'shən) n.
|
Speculation
The process of selecting investments with higher risk in order to profit from an anticipated price movement.
Investopedia Commentary
Speculation should not be considered purely a form of gambling, as speculators do make informed decision before choosing to acquire the additional risks. Additionally, speculation cannot be categorized as a traditional investment because the acquired risk is higher than average.
More sophisticated investors will also use a hedging strategy in combination with their speculative investment in order to limit potential losses.
Related Links
Introduction to Types of Trading: Fundamental Traders
Futures Fundamentals
See also: Hedge, Speculation Index, Speculator, Take a Bath, Take a Flier, Venture Capital
speculation
