Financecalendar_todayLast updated: Apr 2026
What is Arbitrage?
/ˈɑːbɪtrɑːʒ/
Arbitrage is the practice of exploiting price differences for the same asset in different markets, buying low in one place and simultaneously selling high in another for a risk-free profit.
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Everyday Example
If gold costs £1,800/oz in London and £1,820/oz in New York, an arbitrageur buys in London and sells in New York, pocketing the £20 difference.
publicReal-World Application
“High-frequency trading firms use algorithms to spot arbitrage opportunities that exist for milliseconds, executing thousands of trades per second.”
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Did you know?
Arbitrage keeps prices aligned across markets. The very act of exploiting price gaps causes those gaps to close, making markets more efficient.
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Key Insight
True arbitrage is theoretically risk-free, but in practice there are always execution risks, timing risks, and costs that mean "risk-free" profits are never completely guaranteed.
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