Market Participants: Speculators
Speculators are important in the market because they basically “speculate” and try to estimate market trends and price fluctuations and they buy and sell contracts in the hopes that they will make a profit. This is essentially how they make their living and they also can help others out in the process. However, speculators aren't really helping you for your gain. They are helping themselves for the potential of profit.
A speculator is truly and essentially someone who likes to take huge risks and sacrifice safety with their money in return for potentially large returns on their investment. Sometimes a speculator does something that may seem desperate or crazy to a regular stock broker, it is perfectly normal for a speculator to do. A speculator may purchase a very volatile stock in large volumes in the hopes that there will be a small upswing and that the price of the stock or commodity will go up even just a small bit they will make a large amount of profits.
Speculators also do other things such as invest in a company that may potentially be in bankruptcy or even be in a bankruptcy. The speculator hopes and wishes basically that their investment will be a great success if the company that they have invested in emerges from bankruptcy and their stock goes up in price and they can make a great profit from this.
Speculators can truly make a lot of money and some of them are great at this. However, it's almost like an educated guess really and some have studied the market so well that their “hunches” are truly spot on most of the time. This is why some of them have made their careers very wealthy and made others very wealthy.
Although it is one of the riskiest “jobs” in the market, it is very important. Speculators have truly helped companies that have been in dire straits and needed money invested in it when it is down.
Some of these investments have helped companies rebound and do well again after they have been down or even bankrupt. You can almost call a speculator a person of faith, and their faith is in companies and their abilities to bounce back. Their reward of course is potentially becoming wealthy and making the companies they invest in well.