Forward speculator

On the foreign exchange market, a market participant who buys/sells foreign exchange forward in the expectation that the spot rate of the chosen currency at maturity will be higher/lower than the contractually fixed forward price. – In forward speculation, the speculator can operate largely without the use of funds. Because if one disregards costs and security payments (provisions of a security; underpinning), then – the fulfillment business of the speculator from the forward conclusion as well as – the opposite cash transaction transacted with forward maturity balance themselves out up to the arrived (realized; realized) profit or loss sum. The transaction cash of the speculator is thus claimed only in the amount of a possible loss. The potential of the forward speculation is therefore incomparably larger than that of the cash speculation. – The purchase of goods today, but for delivery at a later date. This makes it possible – for producers and processors of commodities to hedge against price risks. This reduces the uncertainty associated with commodity production and usually leads to an increase in the supply of commodities and a decrease in prices, as well as – to gain transparency in the markets. This is because the contracts are standardized and also have a signal function for the corresponding spot markets and the over-the-counter futures markets. – In the USA, at the beginning of 2012, the responsible regulatory authority imposed a volume limit on the commodity futures market; this relates to twenty-eight commodities, including wheat, sugar and gold. The most important provision is the limit on the number of contracts that an entity – such as a trader, bank, commodity pool – may hold. The new legislation is intended to prevent individual market participants from gaining access to more than a quarter of the short-term deliverable quantity of a commodity through derivatives. – See hedge, agribulk, absorption phase, call, fontange, differential, fixing, leverage, indemnity, spot speculator, option, option, naked, position, uncovered, put, yield, implied, risk, commodity price risk, commodity futures contract, collateral, speculator, speculation, stockjobber, futures trader, well-funded, futures speculator, defensibility, commodity futures contract. – See Deutsche Bundesbank Monthly Report, June 2012, pp. 34 f. (on the influence of futures speculation on the oil market).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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