The strategy known as arbitrage lets traders lock in gains by simultaneously purchasing and selling identical securities, commodities or currencies across two different markets. This move lets traders capitalize on the differing prices for the same asset across the two disparate regions represented on either side of the trade.
Arbitrage occurs when a security is purchased in one market and simultaneously sold in another market for a higher price.
The temporary price difference of the same asset between two markets lets traders lock in profits.
Traders frequently attempt to exploit an arbitrage opportunity by buying an asset on a foreign exchange where the price hasn't yet been adjusted.
An arbitrage trade is considered to be a relatively low-risk exercise.
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