Arbitrage is a trading strategy that capitalizes on price discrepancies between different markets for the same asset, allowing traders (Arbers) to profit from these differences while minimizing risk.
Key Components
- Price differences
- Multiple markets
- Quick execution
- Risk management
- Market monitoring
Common Types
- Price arbitrage
- Statistical arbitrage
- Cross-market
- Temporal arbitrage
- Geographic arbitrage
Implementation
- Market analysis
- Price monitoring
- Quick transactions
- Risk assessment
- Position management
Risk Factors
- Market speed
- Price changes
- Execution risk
- Transaction costs
- Technical issues
Success Factors
- Market access
- Quick execution
- Technology tools
- Risk controls
- Capital management
Best Practices
- Real-time monitoring
- Risk assessment
- Cost analysis
- Position sizing
- Market research
Arbitrage requires careful timing and efficient execution to be profitable.