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TeachMeFinance.com - explain speculation speculation -- the act of knowingly investing funds in a venture carrying higher-than-average risks in the hope of making above-average profits. Speculators expect to make a profit because of price changes. historic definition... Speculation -- Dealing on expectations ; buying in expectation of an advance or selling in expectation of a decline. There is a constant, large speculation in stocks , bonds , grain, cotton and coffee. Speculative operations are conducted on margin that is, speculators deposit with the brokers who execute their orders certain amounts of money, designated as margins, which are intended to protect the brokers in case the movement of prices should be against the speculators and they (the speculators) should be unwilling or unable to make good the loss sustained. A party who purchases a stock or a commodity in anticipation of a rise and pays the full price of it is not, in the usual acceptation, engaged in speculation. About the author Mark McCracken Author: Mark McCracken is a corporate trainer and author living in Higashi Osaka, Japan. He is the author of thousands of online articles as well as the Business English textbook, "25 Business Skills in English". Copyright © 2005 by Mark McCracken, All Rights Reserved. TeachMeFinance.com is an informational website, and should not be used as a substitute for professional financial or legal advice. TeachMeFinance.com and its owner recommend consultation with a professional financial advisor prior to any investment or financial decision. Please read our disclaimer.