Speculation is a short-term behavior, and speculators try to make money by guessing the price fluctuations in the market. Speculation may benefit from price fluctuations or market news, but the risk of failure is also high. Speculators don't own or deliver physical transactions, they just bet on the theoretical trend of the market. The essence of speculation is gambling, which is a prediction of the future and cannot really affect the market price.
In contrast, arbitrage is a sound investment strategy. Arbitrators use the price difference in the market to obtain less risky profits. This requires a deep understanding of the market and the ability to respond quickly. For example, when the price difference of a commodity appears in two markets, arbitrageurs can buy the commodity at a low price and sell it in a high-priced market, thus making a profit. Compared with speculators, arbitrageurs are more cautious because their profits depend not only on price expectations, but also on the actual price difference in the market.
To sum up, speculation and arbitrage are two market trading strategies. The purpose of speculators is to obtain high profits through short-term market fluctuations, while arbitrage strategy is to use the price difference in the market to obtain stable profits. Although there are many differences between them, they are not completely mutually exclusive. In some cases, arbitrageurs even use speculators to reverse unbalanced markets. Therefore, when making investment decisions, it is necessary to use these two trading strategies reasonably according to market conditions.