Definitions

Concept Arbitrage Definition Of Arbitrage Arbitrage is buying and selling an asset at the same time but in different markets. The goal of arbitrage is to make profits from small price differences with the aim of closing enough trades to make an ample profit. Arbitrage takes place by trading commodities, stocks, and currencies as well. For example, if the exchange rate of the US dollar in a particular country is lower than in your country, you can buy and sell a sufficient amount that will bring you large profits. These opportunities are usually rare because everything in the financial market is well thought out, but they may occur in inefficient markets. Therefore, the probability of arbitrage occurring is very small.