There's nothing wrong with trading Bitcoins, just like there's nothing wrong with exchanging USD to EUR to buy a glass of wine.
Yes, but if you are spending a lot of time or effort trying to make money on an essentially unproductive activity then I think you should ask yourself if there's something else you could be doing that would be more effective at making the world a better place.
I think a lot of buy-low-sell-high, there-is-always-a-bigger-fool, or high-frequency trading fits into the "isn't making the world a better place" category. If you're competing for a bigger slice of a fixed-sized pie, I think you should think hard about what you could do instead to make the pie bigger for everybody.
Mmmm.... pie......
Agreed. That's why innovation is important.
But speculation isn't entirely worthless. Greed is human nature, to a large extent, short sellers, day traders and HFT bots actually counter human greed because they believe in price convergence. About 80% of trading in forex market is speculative, but they indeed make the rest 20% better off.
I always believe that the best way to counter bubbles is HFT. HFT bots catch tiny profits and destroy the dreams of greedy "investors". What's buy-low-sell-high? It's price stability.
At the beginning, speculative trading may cause volatility because of the market power being controlled by a few hands. So we need more speculators. They provide liquidity for everyday bitcoin transactions. They bring Bitcoin closer to our real world economy.
Without speculation, we can hardly produce any goods or services in Bitcoins efficiently.
If there's anything harm about speculators, it means we need more of them, not less, in absolute figures. The way to make the pie bigger is to convince real world merchants to accept Bitcoin, but not criticize the speculators and ask them to provide services instead.