what is hedging and speculation?

What is the main difference between hedging and speculation ???????????????:smartlease describe it in detail.

Speculation is attempting to benefit from a change in price. Buy low, sell high.

Hedging is looking to eliminate or reduce exposure to a particular sort of risk. For example, a multi-national corporation may hedge transactions done in foreign currencies to eliminate the risk of adverse exchange rate moves.

Speculation is the practice of engaging in risky financial transactions in an attempt to profit from short or medium term fluctuations in the market value of a tradable good such as a financial instrument.
Hedging is a risk management strategy used in limiting or offsetting probability of loss from fluctuations in the prices of commodities, currencies, or securities.

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Here is described difference between hedging and speculation.

Hedging involves in reducing risk in order to focus on another subject, while speculating involves taking on risk in order to profit from insight.

Hedging offers an element of protection against price risk, whereas speculation involves deliberately taking a risk on price fluctuations, in the hope of obtaining a profit.
The hedger gives up some opportunity in exchange for reduced risk. The speculator on the other hand acquires opportunity in exchange for taking on risk.

Hedging is the posh term Traders use to disguise the Speculation they are really doing

Another difference:
Both broker an trader are using hedging and speculation. But trader hedge from the risk to blow up, and broker hedge from the risk of profit by the trader.

Speculators look to make a profit from price changes. Hedgers look to protect against a price change
The main purpose of speculation, on the other hand, is to profit from betting on the direction in which an asset is going to be moving. Hedgers reduce their risk by taking an opposite position in the market to what they're trying to hedge.

I think Rhody Trader gives the best definition. Hedging reduces a form of risk. Given the natural inverse relationship between risk and reward (or at least the academic inverse relationship), one should expect lower mean returns and lower variance of returns from hedging. If your hedge adds extra PNL, then you should really think as to whether or not you're actually mitigating risk.

In the book "Boomberang" by Michael Lewis, among other things, he investigates the causes of the Icelandic financial crises, and he found that prior the the crisis, speculation had become almost a national passtime. He said that people loved to hedge, as long as the hedges made money too.