What is arbitrage trading?

Arbitrage is trading that exploits the tiny differences in price between identical assets in two or more markets. The arbitrage trader buys the asset in one market and sells it in the other market at the same time in order to pocket the difference between the two prices.

How to make a profit from arbitrage?

Technically, two simple explanations depend on the arbitrage opportunity: Buy a product for a lower price in market A, sell it for a higher price in market B, and earn a profit; Buy product A for a lower price, hold the asset, re-sell for a higher price later on, and make a profit. What is Investing? Putting Money to Work How to Buy Stocks?

What is pure arbitrage?

Pure arbitrage and arbitrage are terms that are used interchangeably – in this case, pure arbitrage means an instant buy-and-sell decision, where an investor simultaneously buys and sells the same asset in two different markets to profit from the price difference.

What is breaking down arbitrage?

BREAKING DOWN 'Arbitrage'. Arbitrage occurs when a security is purchased in one market and simultaneously sold in another market at a higher price, thus considered to be risk-free profit for the trader.