Speculation

Speculation in simple terms is buying an asset (shares, currency, commodity, etc) for a short period of time assuming that the cards are in their favor so that you can gain big. This happens with no prior knowledge about that asset or instrument.

People who do speculation are called speculators, they do it mainly for two reasons firstly, the greed of making big money in a short or concise period, and secondly, the fear of missing out on the Bullrun most exciting thing is the two are interlinked.

Due to a lack of financial literacy, people put their money into various assets and instruments on the basis of some tips and eventually end up making huge losses and sometimes wiping off their entire capital. Since they try their luck in the market without knowledge, they are unaware of risk and reward factors. This is the reason why stock market trading is considered ‘Gambling’. At the same time, it is pure economics of demand and supply in the market.

We have learned the basic definition and what factors are related to it, let's know how this works in India, for example, a friend of mine who wants to make some extra money gets a buy call (tip) from some other person whom he believes to be giving the right call but what happens is he is attracted by the greed of lucrative return the end up losing the entire capital and sometimes the situation is so uncontrollable that people end up with negative balance i;e,. Overdraft with the broker. Often when they get tips, the market is likely to be in a bull run but that is not an issue, the problem arises when they follow the same kinds of tips in a bear market where they get trapped.