DEFINITION of 'Time Arbitrage'
An opportunity created when a stock misses its mark and is sold based on a shortterm outlook with little change in the longterm prospects of the company. This miss occurs when a company fails to meet earnings estimates by analysts or its guidance, resulting in a shortterm stumble where the price of the stock decreases. Some investors use time arbitrage to increase their chances of outperforming the market.
BREAKING DOWN 'Time Arbitrage'
There are numerous examples of time arbitrage. Generally speaking, single misses do not mean a company is in trouble, and there is often a good chance of a rebound long term. However, if the misses become habitual, time arbitrage may actually be a losing proposition. Essentially, time arbitrage is another version of the old advice, "buy on bad news, sell on good."

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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 >> 
What skills should I acquire to take advantage of arbitrage trading?
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What models should I use to make arbitrage trades?
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How do I use software to make arbitrage trades?
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What are the biggest risks associated with covered interest arbitrage?
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What is the difference between arbitrage and hedging?
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