Arbitrage is the simultaneous purchase and sale of the same asset in different markets in order to profit from tiny differences in the asset's listed price. It exploits short-lived variations in the price of identical or similar financial instruments in different markets or in different forms.

What does the word arbitrage?

1 : the nearly simultaneous purchase and sale of securities or foreign exchange in different markets in order to profit from price discrepancies. 2 : the purchase of the stock of a takeover target especially with a view to selling it profitably to the raider. arbitrage. verb.

What are the 3 types of arbitrage?

There are several types of arbitrage, including pure arbitrage, merger arbitrage, and convertible arbitrage. Global macro is another investment strategy related to arbitrage, but it's considered a different approach because it refers to investing in economic changes between countries.