Speculative Capital

AAA

DEFINITION of 'Speculative Capital'

The funds earmarked by an investor for the sole purpose of speculation. This capital is often associated with extreme volatility and a high probability of loss. Most speculators have short-term investment horizons and often use high degrees of leverage in their efforts to obtain profits.

INVESTOPEDIA EXPLAINS 'Speculative Capital'

Given the above average probability of loss in speculative trading, it is critically important to exercise good risk management and not become emotionally attached to a certain trade. It is not uncommon to see novice investors hold onto a position until it loses nearly all of its value. Given their limited experience, rookie traders should regard all their tradable capital as speculative capital. In other words, they should only invest whatever amount of money they can afford to lose without their way of life being materially affected.

RELATED TERMS
  1. Capital

    1) Financial assets or the financial value of assets, such as ...
  2. Trading Capital

    The amount of money allotted to buying and selling various securities. ...
  3. Casino Finance

    A slang term for an investment strategy that is considered extremely ...
  4. Leverage

    1. The use of various financial instruments or borrowed capital, ...
  5. Risk Capital

    Investment funds allocated to speculative activity. Risk capital ...
  6. Risk Lover

    An investor who is willing to take on additional risk for an ...
Related Articles
  1. Forex Education

    How To Profit From Interventions In The Forex Market

    The forex market can be extremely profitable. Learn how to spot an intervention and trade when it's occurring.
  2. Forex Education

    Forex: Money Management Matters

    Currency trading offers far more flexibility than other markets, but long-term success requires discipline in money management.
  3. Options & Futures

    Applying Binary Options To Equity Markets

    A binary option payout depends on the outcome of a “yes” or “no” proposition, related to the difference between underlying asset price and strike price.
  4. Investing

    What is the difference between arbitrage and speculation?

    Arbitrage and speculation are very different strategies. Arbitrage involves the simultaneous buying and selling of an asset in order to profit from small differences in price. Often, arbitrageurs ...
  5. Investing Basics

    Choosing Between Major and Junior Mining Stocks

    In this article, we'll compare the juniors and the majors and look at what each can add to your portfolio.
  6. Investing Basics

    The Role Of Speculators In The Commodity Market

    Contrary to popular belief, speculators are important for the market. Find out exactly what they do.
  7. Trading Strategies

    What Is Spread Betting?

    The temptation and perils of being over leveraged is a major pitfall of spread betting. However, the low capital outlay necessary, risk management tools available and tax benefits make spread ...
  8. Mutual Funds & ETFs

    Speculating With Exchange Traded Funds

    More and more investors have been drawn to the often volatile ETFs. Learn how you can use this instrument for big returns.
  9. Investing Basics

    The Art Of Speculation

    Speculators believe that the market overreacts to a host of variables. These variables present an opportunity for capital growth.
  10. Forex Education

    The Currency Market Information Edge

    Unique features of the forex market may allow larger players to get a jump on smaller ones.

You May Also Like

Hot Definitions
  1. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  2. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  3. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  4. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  5. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  6. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
Trading Center