Spice Trader

AAA

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.

INVESTOPEDIA EXPLAINS '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. Junk Bond

    A colloquial term for a high-yield or non-investment grade bond. ...
  2. Speculative Risk

    A category of risk that, when undertaken, results in an uncertain ...
  3. Default Risk

    The event in which companies or individuals will be unable to ...
  4. Exotic Option

    An option that differs from common American or European options ...
  5. Frontier Markets

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

    The risk that an investment's returns could suffer as a result ...
Related Articles
  1. Bonds & Fixed Income

    Junk Bonds: Everything You Need To Know

    Don't be fooled by the name - junk bonds may be for you if you know how to analyze them.
  2. Options & Futures

    Investors: Rely On Your Gut

    Find out how your personality and natural instincts can direct your investment choices.
  3. Options & Futures

    Naked Options Expose You To Risk

    Find out why these enticing options can spell trouble for your bottom line.
  4. Investing Basics

    The Lowdown On Penny Stocks

    Think penny stocks will make you rich? If you don't understand the risks, you could end up penniless.
  5. Options & Futures

    Profiting From Stock Declines: Bear Put Spread Vs. Long Put

    If you're bearish, you should compare the risk/reward characteristics of these two strategies.
  6. Options & Futures

    5 Secrets You Didn't Know About Roth IRAs

    Between its generous tax benefits at retirement and no required minimum distributions, a Roth IRA is well worth considering if you're eligible to have one.
  7. Forex Strategies

    The 10 Riskiest Investments

    Investors seeking high returns must also be prepared for high risk. Here are ten of the riskiest investments available.
  8. Options & Futures

    Trade Covered Calls On High Dividend Paying Stocks

    We explain the risks, rewards, timing, and profit and loss considerations for covered calls with dividend stocks.
  9. Options & Futures

    Was Buffet Right about Derivatives as WMDs?

    Why Warren Buffet described derivatives as weapons of mass destruction, and when can they be helpful or harmful?
  10. Investing

    What Tech Companies Seeking Funding Must Overcome

    Tech companies face a unique set of challenges, including a need for timely responses to changes in technology and difficulty recruiting the right talent.

You May Also Like

Hot Definitions
  1. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  2. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  3. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  4. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  5. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  6. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
Trading Center