The act of simultaneously buying and selling an identical or similar asset in order to realise profits from inexplicable discrepancies between that asset’s price at the same time across different markets.
Profiting via arbitrage trading is done by simultaneously buying at the lower price and selling at a higher price.
Arbitrage is, effectively, risk-free profit for the trader. It occurs as a result of market inefficiencies.
Arbitrage is monitored for by brokers, as trading server latency can factor into providing an arbitrage opportunity between two servers.Back to Glossary