Hedgers, Speculators and Arbitrageurs are the three major traders in the markets of futures, forward and options. All three of these investors have a great deal of liquidity in the market.
Arbitrageurs
Arbitrage occurs when a security is purchased in one market and simultaneously sold in another market, for a higher price. The temporary price difference of the same asset between the two markets lets traders lock in profits.
Hedgers
An investor who is looking at reducing his risk is known as a Hedger. A Hedger would typically look at reducing his asset exposure to price volatility and in a derivative market, would usually take up a position that is opposite to the risk he is otherwise exposed to.
Speculators
Speculators purchase asset with the hope that it will become more valuable in the near future. Many speculators pay little attention to the fundamental value of a security and instead focus purely on price movements.
