What Are Speculators and Hedgers?

Hedgers try to reduce the risks associated with uncertainty, while speculators bet against the movements of the market to try to profit from fluctuations in the price of securities. Both may swim against the tide of market sentiment, but they do so out of very different motives.

What is a hedgers role?

A hedger is any individual or firm that buys or sells the actual physical commodity. Many hedgers are producers, wholesalers, retailers or manufacturers and they are affected by changes in commodity prices, exchange rates, and interest rates.

What is the difference between hedgers speculators and arbitrageurs?

NB : While Hedgers look to protect against a price change, speculators look to make profit from a price change. Also, the hedger gives up some opportunity in exchange for reduced risk. The speculator on the other hand acquires opportunity in exchange for taking on risk. ... Arbitrage involves limited risk.