Short Term Money Markets

Posted on January 25, 2012 by Admin
Short Term Money Markets

Short Term Money Markets

There are a number of risks to the market from short term speculators. The overall effects of investors without long term gains in mind can be drastic and directly impact the viability of the market. While some influx capital from short term speculators is necessary, occasional problems arise for certain markets.

Liquidity

Many risks to the market from short term speculators center around the liquidity of the financial products that the investors purchase. Because short term speculators enter into certain positions with large amounts of money, the securities may not fluctuate in price. While market liquidity can be a positive effect due to the minimal loss in value of a product, it also means that less profits are made for long term investors. Short term speculators tend to move money from one security to another in search of the fastest gain, meaning that certain products see an influx of funds, while others see drastic decreases very quickly.