It is doubtless well known to the readers of this volume that the great mass of transactions on most of the exchanges have a speculative character. A great many securities, to be sure, are actually taken out of safe deposit boxes and brought into the market to be sold outright, and a great many securities are every day purchased to be held as permanent investments; yet the speculative buying and selling overshadows investment buying and selling.

The activities of the "floor traders" or "scalpers" who buy and sell for a profit of 1/8 to 1/4 % have been mentioned. Many of these traders, though not all, make it a point to match all their purchases and sales before the end of every business day, thus reducing their risk of heavy loss to a minimum. These men proceed almost as much by intuition as by reasoning. If they see in the manner of bidding of other brokers, or "feel it in the air," that a given security is tending upward, they will help along the movement by making a purchase with the expectation of reselling a little later at a slight profit. One result of their activities is to concentrate attention and the volume of transactions on a few active securities. Their business thrives on rapidity of fluctuation in prices. However, their operations tend to restrict the range of fluctuation for they are ready to buy on a momentary drop in price or to sell on a momentary rise, and to resell or rebuy as soon as the normal level is again reached.

A second group of speculators consists of brokers and of others who are in close relation with the Wall Street market and who carry on buying and selling campaigns with the expectation of "cashing in" within a few weeks or months. Sometimes a group of these operators will form a syndicate for the purpose of "bulling" or "bearing" the price of a security. Through "matched" orders for buying and selling they create an artificial activity, and bring about great changes in quotations. Their calculation is that sooner or later outsiders will be attracted by the movement and will endeavor to go along with it. By gradually feeding out or repurchasing the security in which they are interested, they may be able to clear a large profit for themselves.

A third group of speculators consists of men who possess a real or fancied knowledge of the intrinsic value of a security, and who buy or sell when the market price is a considerable distance away from what they believe to be the normal price, in the expectation that at some later date the normal price will be reached and they may realize a profit. Included in this group are officers and directors of corporations the securities of which are listed on the exchange, who should be in position to know more about the real standing and probable future showing of their corporation than anyone else. Unfortunately for these men, it frequently happens that they do not give proper weight to general market influences which affect the whole general level of security prices. It is not at all an uncommon case for a man who is thoroughly well acquainted with a given corporation to form an entirely mistaken idea as to the market value of its securities.

A fourth group of speculators consists of the "lambs" who are not equipped with the experience and insight of the "floor traders," do not possess the knowledge of market conditions and financial resources of the larger operators, and are not acquainted with given securities as corporation officials are. For the most part they simply gamble on the strength of "tips" or of hazy impressions; and it can never be more than a temporary accident if they happen to make profits. The number of these people and the volume of their transactions is often exaggerated, but their losings nevertheless provide a steady source of revenue for the better informed and more skilful speculators.