Connect With Us
Register
Login
Arbitrage definition
Arbitrage is a trading strategy that profits from a price difference for the same asset, or closely related assets, across different markets. You buy where the price is lower and sell where it is higher.
Arbitrage can appear in stocks, forex, commodities, bonds, futures, options, cryptocurrencies, and ETFs. Price gaps open because of market inefficiency, timing delays, liquidity gaps, differences between exchanges, or differences between pricing models.
Arbitrage opportunities are often small and close quickly as traders act on them. Before treating a price gap as real arbitrage, you account for transaction costs, execution speed, liquidity, slippage, and settlement risk, because any of these can wipe out the difference.
Arbitrage Example
Gold trades at USD 2,350 on one exchange and USD 2,355 on another. You buy at USD 2,350 and sell at USD 2,355.
The gap before costs is:
2,355 - 2,350 = USD 5 a unit
It is real arbitrage only if you can complete both trades quickly and your costs stay below USD 5.
The information provided on this website is of a general nature only and does not constitute personal financial advice. Before acting on any information on this website, you should consider the suitability of the information in relation to your objectives, financial situation and needs. Investing in CFDs and FX Margin Contracts carries significant risks and is not suitable for all investors. You may lose more than your initial deposit. You do not own, or have, any interest in the underlying asset. We recommend that you seek independent advice and ensure you fully understand the risks involved before trading. It is important that you read and consider the disclosure document before you acquire any product listed on the website. The information and advertisements offered on this website are not intended for use by any person in any country or jurisdiction where such use would be contrary to local laws and regulations. The Products and Services offered on this website are not intended for residents of the United States, Malaysia and Thailand.
TMGM is authorized and regulated in various jurisdictions.
Trademax Australia Limited, trading as TMGM, is regulated by the Australian Securities and Investments Commission (ASIC), AFSL no. 436416 and is located at Level 28, One International Tower, 100 Barangaroo Avenue, 2000 Sydney, NSW Australia.
Email: support@tmgm.com.au
Trademax Global Limited, trading as TMGM, is authorized and regulated by the Vanuatu Financial Services Commission (VFSC), registration number 40356 and registered at 1276, Kumul Highway, Port Vila, Vanuatu, Republic of Vanuatu.
Email: support@tmgm.com
Trademax Global Markets (SE) Limited, trading as TMGM, is authorized and regulated by the Financial Services Authority (FSA) of Seychelles, with license number SD224. The company is registered at Office No 13, Providence Estate ABIS Centre, Mahe, Seychelles.
Email: support@tmgm.com
Trademax Global Markets (International) Pty Ltd, trading as TMGM, is authorized and regulated by the Financial Services Commission, Mauritius (FSC) with license no. GB22201012, and registered at 33, Edith Cavell Street C/o IQ EQ Fund Services (Mauritius) Ltd Port Louis, 11324 Mauritius.
Email: support@tmgm.com
Copyright © TMGM. All rights reserved