Arbitrage

Arbitrage is when you buy and sell the same type of asset in different markets, almost at the same time. The goal is to make a profit from the tiny differences, with the aim to make enough transactions to make a sizeable profit.

Arbitrage trades happen with commodities, stocks and currencies. For example, if the dollar rate in one country is a few cents cheaper than in yours, you could buy and sell enough to make a profit.

Such opportunities are rare since everything is computerized; these opportunities are created by inefficiencies in the market. There are only short windows in which arbitrage can be done.

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