EXPLAIN THE VARIOUS TYPES OF STOCK EXCHANGE SPECULATORS
Ans. The following players participate in the transactions taking place in stock exchanges:
A. Stock Exchange Speculators
Persons who make profits by trading securities for short term purpose. They accept high risk and do not take or give delivery of securities. One difference between buying and selling is their profit.
Types of speculators
Depending upon the nature of speculation, the speculators may be called as bulls, bears, stag and lame duck.
1. Bull: A bull is a speculator who expects a rise in the price of certain security in future. He buys that security to sell it at the expected higher price. He does not take the actual delivery of securities.
With an optimistic tendency, he places big order for buying a security thereby leads to a rise in the price of that particular security. A bull in general throws its victim upwards. As the speculator expects a rise in the price of securities, his tendency is compared to that of bull and therefore, is named after bull. In technical terms he is said to be "on the longside of the market." He is also known as teji wala
2. Bear: A bear is a speculator, who expects a fall in the price of certain securities and agrees to sell the securities at a fixed date in future, which he may or may not possess. If the price of that security falls before the date of sale, he purchases the security at a lower rate and sells it for higher rate as agreed earlier. The difference between the purchase price and selling price is the profit earned by him.
A bear usually presses its victim down to the ground. As the pessimistic tendency of the speculator, he expects a fall in price of security and therefore, he is named after bear. When the bear speculator sells the securities, the price gradually decreases. The bear's pressure thereby leads to the fall in the prices of securities automatically. Selling of the securities, which the bear does not possess is called short selling. He is also known as mandiwala.
3. Stag: A stag is cautious speculator. He neither buys nor sells the shares. He applies for the shares of a new company for face value and he expects they are sold at a premium i.e., more than its face value. The difference between the price paid by him and the selling price is his profit. He is bullish in nature as he expects a rise in the price of security he applied for.
4. Lame Duck : When the expectations of bear does not become true and the price of security does not fall, he cannot fulfil his commitment, and he is said to be lame duck. Bear may agree to sell certain security on a certain date and may not be able to deliver the security as it may not be available in the market. On the agreed date if the other party does not agree to oblige him, he suffers like a lame duck.
Read more:- EXPLAIN THE DIFFERENT TYPES OF BANK PAYMENTS
B. Stock Exchange Operators
The following Operators act as intermediaries:
1. Jobber: Jobber deals with securities independently. He purchases and sells the securities in his own name. A jobber can deal with a broker or with another jobber but not with non-members in the stock exchange. He works for profit. He deals with a limited number of shares.
2. Broker: Broker is a link between a jobber and general public. He deals with a large variety of securities. He works for a commission. He contacts the jobber to buy or sell the securities on behalf of the general public.