Spice Trader


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.

  1. Speculative Risk

    A category of risk that, when undertaken, results in an uncertain ...
  2. Junk Bond

    A colloquial term for a high-yield or non-investment grade bond. ...
  3. Exotic Option

    An option that differs from common American or European options ...
  4. Political Risk

    The risk that an investment's returns could suffer as a result ...
  5. Frontier Markets

    Less advanced capital markets from the developing world. Frontier ...
  6. Default Risk

    The event in which companies or individuals will be unable to ...
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  1. Can hedge funds trade penny stocks?

    Hedge funds can trade penny stocks. In fact, hedge funds can trade in just about any type of security, including medium- ... Read Full Answer >>
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    Alternative investment vehicles such as hedge funds offer investors a wider range of possibilities due to certain exceptions ... Read Full Answer >>
  3. Which mutual funds made money in 2008?

    Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
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    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
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