I am having some difficulties understanding the difference between hedging and speculation.
HEDGING AND FUTURE CONTRACTS
I know that if the investor gains when the price decrease and loses when the price increases then a long futures position will hedge the risk.
I know that if the investor gains when the price increases and loses when the price decreases then a short futures position will hedge the risk.
This makes sense to me. So an investor will make gains if he buys the asset if the price decreases and will gain when he sells the assets and the price increases.
SPECULATION AND FUTURE CONTRACTS
But then, in my textbook it states the complete opposite for speculators:
If the investor takes a long position he gains when price increase and loses when price decrease.
If the investor takes a short position he gains when prices decrease and loses when it increases.
My question being, how is it possible for a speculator to make profit when prices increase and he buys the asset
How is it possible for a speculator to gain when he sells the asset when prices are decreasing?
This doesn't seem to make sense to me. I have some learning disabilities so please explain in the simplest way possible. Thanks!
EDIT. what would then be the difference between hedgers and speculators in making profit?