It is the character of negative events to lay less firmly hold of the mind than positive ones. The minds of Stock Exchange speculators are like other people’s minds. A speculator will often attribute a certain movement in prices to an influence which happened to be exercised at a particular moment, and he contents himself with the apparent connection of the two, and looks no farther. On another occasion, when operating in the same way, immediately upon the recurrence of the same influence he is bewildered to find prices move in an opposite direction. This comes from being satisfied with any solution which lies on the surface, and chances to catch the eye. It used to be supposed that comets were the cause of hot weather, and the theory was considered to be well founded, because more comets were seen during the summer months than at other seasons of the year. Hot and cloudless weather is most favourable for seeing comets, but they are no more productive of hot weather than is hot weather of them. This circumstance being fixed upon by one class of theorisers, shows how an event which is positive lays hold of the mind of any person who may be interested in certain effects and is in search of the causes. It is of great importance, in endeavouring to connect certain effects with specific causes, to mark carefully two distinct things, first, the occurrence of an event, and, secondly, our observation of it. Many entirely wrong deductions as to the causes of fluctuations in the value of money, and in the prices of Stock Exchange securities, are made from negligence in this respect. As every rule has its exception, so in speculation are there a few professional experts who succeed at it as a business. What is contained in these pages is not for the expert, who is well able to take care of himself, but for the ordinary haphazard operator. The professional speculator, who has the right sort of head, sufficient capital, patience, perseverance, coolness, and a business-like aptitude for laying down the elaborate machinery that is necessary for mercantile success, may succeed. In the following chapters it is our intention always to make this reservation, and in speaking of the speculator, who must always lose in the long run, we refer to the ordinary run of men, whom we will designate as haphazard speculators. THE THEORY OF STOCK EXCHANGE SPECULATION. CHAPTER I. TECHNICAL TERMS EXPLAINED. [Sidenote: JOBBERS AND BROKERS] The members of the Stock Exchange are of two descriptions, jobbers and brokers. The jobber[9] deals in stocks and shares, either as a buyer or seller, at the market prices. The broker deals with the jobber, and is paid a commission by his principal for transacting the business between the two. [Sidenote: THE BULL.] A bull is a speculator who buys for the settlement[10] with a view of selling at some future date at a higher price, and gaining by the difference. [Sidenote: THE BEAR.]