An analysis of the profiles, motivations, and modes of habitual commodity speculators
Canoles, William Bruce
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https://hdl.handle.net/2142/22754
Description
Title
An analysis of the profiles, motivations, and modes of habitual commodity speculators
Author(s)
Canoles, William Bruce
Issue Date
1994
Doctoral Committee Chair(s)
Thompson, Sarahelen R.
Department of Study
Agricultural and Consumer Economics
Discipline
Agricultural and Consumer Economics
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Economics, Agricultural
Economics, Theory
Psychology, General
Recreation
Language
eng
Abstract
The focus of this study was to learn more about a critical commodity market participant, the long term speculator. The speculator's activity broadens a market, creates essential liquidity, and performs an irreplaceable pricing function. Working knowledge of the profiles, motivations, and modes of habitual speculators is essential to both market theorist and policy makers.
Responses to a 73 question survey were collected directly from retail commodity brokers with offices in Alabama. Each questionnaire recorded information on an individual commodity client who had traded for an extended period of time.
The research determined that the typical trader studied was a married, white male, age 52. He is exceptionally affluent and well educated. He is a self-employed business owner who has shown the ability to recover from financial setbacks. He is a political right wing conservative who is highly involved in the political process. He assumes a good deal of risk in most phases of his life. He is both an aggressive investor and an active gambler.
"This trader does not consider preservation of his commodity capital to be a very high trading priority. As a result, he rarely uses ""stop loss"" orders. He has a career ""winning percentage"" of over 51% but is a net loser in dollar terms. In spite of recurring trading losses, he has never made any substantial change in his basic trading style."
"To this trader, whether he won or lost on a particular trade is more important than the size of the win or loss. Thus he consistently cuts his profits short while letting his losses run. He also anguishes more about missing a move in the market by being on the sidelines than about losing money due to a ""miss call"" of the market; i.e., being in the action is more important than the financial consequences."
Participating brokers confirmed that for the majority of the speculators studied, the primary motivation for continuous trading is the recreational utility derived largely from having a market position.
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