Arbitrage

Beginner

Arbitrage is a financial strategy that involves taking advantage of price differences between different markets or exchanges. The goal of arbitrage is to profit from these differences by buying an asset at a lower price in one market and selling it at a higher price in another market. This can be done with a variety of financial instruments, such as stocks, bonds, currencies, commodities, and derivatives.
 
Arbitrage can be divided into two main categories: spatial arbitrage and temporal arbitrage. Spatial arbitrage, also known as geographical arbitrage, involves taking advantage of price differences between different markets or exchanges. For example, a trader might buy a stock on the New York Stock Exchange (NYSE) and sell it on the Tokyo Stock Exchange (TSE) at a higher price, profiting from the price difference between the two markets.
 
Temporal arbitrage, also known as time-based arbitrage, involves taking advantage of price differences between different points in time. For example, a trader might buy a stock today at a lower price and sell it tomorrow at a higher price, profiting from the price difference between the two points in time.