Speculation Definition

Speculation is the process of investing in risky investments with a goal of achieving profits. Speculators are not necessarily gambling, however, because they often approach investing with high risk tolerance and make informed investing decisions. Speculation is not a traditional form of investing because the risk involved is much higher than normal.

Speculation is sometimes blamed for driving commodity prices higher than would otherwise be warranted, as speculators continue to purchase commodity futures based on the belief that the commodity’s price will continue to rise.