What is arbitrage trading?

Traders frequently attempt to exploit the arbitrage opportunity by buying a stock on a foreign exchange where the share price hasn't yet been adjusted for the fluctuating exchange rate. An arbitrage trade is considered to be a relatively low-risk exercise. What Is Arbitrage?

What is a risky arbitrage strategy?

If the stock is trading at different prices on the different exchanges, a simple arbitrage strategy entails buying the stock at the lower price on one exchange while at the same time selling it at the higher price on the other exchange. A riskier arbitrage strategy involves leveraging mergers and acquisitions of public companies.

How do traders exploit arbitrage opportunities in the stock market?

In the stock market, traders exploit arbitrage opportunities by purchasing a stock on a foreign exchange where the equity's share price has not yet adjusted for the exchange rate, which is in a constant state of flux.

Is an arbitrage trade a low-risk exercise?

An arbitrage trade is considered to be a relatively low-risk exercise. What Is Arbitrage? Arbitrage describes the act of buying a security in one market and simultaneously selling it in another market at a higher price, thereby enabling investors to profit from the temporary difference in cost per share.