#ArbitrageTradingStrategy Arbitrage Trading Strategy
Arbitrage trading strategy involves taking advantage of price differences for the same asset in two or more markets. Traders, or arbitrageurs, buy the asset at a lower price in one market and sell it at a higher price in another, capitalizing on the price discrepancy.
This strategy is based on the principle of buying an asset at a lower price in one market and selling it at a higher price in another, thereby capitalizing on the differences.
Arbitrage opportunities arise when there is a lag in information between different markets, such as a stock trading at a lower price on one exchange than another due to the delay in information flow between the two exchanges.
The objective of arbitrage is to profit from the temporary difference in cost per share between the two markets.
Arbitrage strategies rely on identifying temporary inefficiencies in market pricing.
While arbitrage aims to capitalize on these differences, it can also contribute to market efficiency by helping align prices across markets.
These transactions must occur simultaneously to minimize the risk of the price changing before both transactions are complete.