DEFINITION of 'Spice Trader'

A slang term used to describe an investor who tends to trade in high-risk investment vehicles or markets. Spice traders prefer to invest in riskier endeavors and seek higher risk premiums for the risk that they take on.

BREAKING DOWN 'Spice Trader'

A spice trader can invest in any number of investment vehicles or markets. Investing in emerging or frontier markets, junk bonds, exotic options, and derivatives and stocks trade on the pink sheets are all investments that a spice trader may take on. The primary motive for a spice trader is to increase returns by investing in high-risk, highly speculative assets/debentures/markets. As a result, spice traders are able to demand a greater premium for the increased risk that they take on.

RELATED TERMS
  1. Take A Flier

    The slang term for a decision to invest in highly speculative ...
  2. Entrepôt

    A seaport or warehouse where goods are stored until they are ...
  3. Risk Premium

    The return in excess of the risk-free rate of return that an ...
  4. Investing

    The act of committing money or capital to an endeavor with the ...
  5. Risk Averse

    A description of an investor who, when faced with two investments ...
  6. Investor

    Any person who commits capital with the expectation of financial ...
Related Articles
  1. Financial Advisor

    How To Construct A High-Risk Portfolio

    Over time, intelligent and disciplined risk-seeking behavior can produce substantially above-average returns.
  2. Investing

    Money Management: 4 Things to Consider Before Trading Riskier Securities

    Learn about factors that every investor should consider before purchasing any risky security. Find out why suitability, liquidity and expertise are important.
  3. Investing

    How Profitable Is Pumpkin Spice Latte for Starbucks?

    The immensely popular pumpkin spice latte has been called a "harbinger of the season." But how much money does Starbucks actually make on this fall drink?
  4. Investing

    How To Outperform The Market

    Active trading is an investing style that aims to beat the market. Find out how it works, and whether it will work for you.
  5. Personal Finance

    A Day in the Life of a Day Trader

    Day trading has many advantages and, while we often hear about these perks, it's important to realize that day trading is hard work.
  6. Investing

    Why Risk-Free Investments Don't Exist

    We explain the risks inherent with all types of investments and why risk-free investments do not exist.
  7. Personal Finance

    Trader vs Investment Banker: Which Job Is Best For You?

    Thinking of a career as an investment banker or a trader? Then you'd better know the difference!
  8. Trading

    What Type Of Forex Trader Are You?

    Timing may be the key to uncovering your true strength as a forex trader.
  9. Trading

    The Roles Of Traders And Investors In The Marketplace

    Discover how these two groups work together to keep the market functioning properly.
  10. Investing

    Where to Invest Your Money? 10 Steps to Financial Success

    Learn where to invest your money ten steps. Included is how to develop a proper investment plan, different investment products and brokerage options.
RELATED FAQS
  1. Are short-term investments a good strategy for cash-rich small businesses"?

    Learn more about investment choices available to small businesses and whether short-term investing is a smart choice for ... Read Answer >>
  2. Is market risk premium the same for all investors and investments?

    Learn about how market risk premiums are determined, how they are calculated, why some assets require higher premiums and ... Read Answer >>
  3. What are some of the limitations of only looking at the rate of return for an investment?

    Learn why only reviewing the rate of return for an investment poses a risk to the investor and what additional factors should ... Read Answer >>
  4. What does a high equity risk premium signify about a company's stock future?

    Learn about how a high equity risk premium affects a stock's future. These types of stocks tend to be the most volatile instruments ... Read Answer >>
  5. What is the difference between investing and trading?

    Investing and trading are two very different methods of attempting to profit in the financial markets. The goal of investing ... Read Answer >>
Hot Definitions
  1. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  2. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  3. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  4. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
  5. Yuppie

    Yuppie is a slang term denoting the market segment of young urban professionals. A yuppie is often characterized by youth, ...
  6. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
Trading Center