Showing posts with the label international-arbitrage


THE WORLD OF ARBITRAGE Day traders work fast, looking to make lots of little profits during a single  day. Arbitrage is a trading strategy that looks to make profits from small  discrepancies in securities prices. The word arbitrage itself comes from the  French word for judgment; a person who does arbitrage is an arbitrageur, or  arb for short. The idea is that the arbitrageur arbitrates among the prices in  the market to reach one final level. In theory, arbitrage is riskless. It’s illogical for the same asset to trade at dif ferent prices, so eventually the two prices must converge. The person who  buys at the lower price and sells at the higher one will make money with no  risk. The challenge is that everyone is looking for these easy profits, so there  may not be many of them out there. Good arbitrageurs have a paradoxical  mix of patience, to wait for the right opportunity, and impatience, to place  the trade the instant the opportunity appears. If you have the fo