Arbitrage

Arbitrage involves capitalizing on price differences of the same asset across multiple markets. Traders buy the asset at a lower price from one market and simultaneously sell it at a higher price in another market, thereby making a profit.

Arbitrage is a common trading strategy, often automated, that helps stabilize asset prices. When an asset is priced too high or too low in certain markets, arbitrage opportunities arise. Traders can profit from these discrepancies until the prices reach equilibrium across the markets.