Market Arbitrage

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DEFINITION of 'Market Arbitrage'

Purchasing and selling the same security at the same time in different markets to take advantage of a price difference between the two separate markets.

BREAKING DOWN 'Market Arbitrage'

An arbitrageur would short sell the higher priced stock and buy the lower priced one. The profit is the spread between the two assets.

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RELATED FAQS
  1. What is the difference between arbitrage and speculation?

    Arbitrage and speculation are very different strategies. Arbitrage involves the simultaneous buying and selling of an asset ... Read Answer >>
  2. What skills should I acquire to take advantage of arbitrage trading?

    Understand what arbitrage trading involves and what the necessary skill set is that a trader must develop in order to master ... Read Answer >>
  3. What is the difference between arbitrage and hedging?

    Dive into two very important financial concepts: arbitrage and hedging. See how each of these strategies can play a role ... Read Answer >>
  4. How do I use the news to find arbitrage opportunities?

    Learn what risk arbitrage trading is and how this type of arbitrage trading opportunity is available to individual retail ... Read Answer >>
  5. Is there a difference between financial spread betting and arbitrage? (AAPL, NFLX)

    Find out more about financial spread betting, arbitrage and the differences between financial spread betting and the arbitrage ... Read Answer >>
  6. How do I use software to make arbitrage trades?

    Understand the meaning of arbitrage trading, and learn how traders employ software programs to detect arbitrage trade opportunities. Read Answer >>
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