What is arbitrage & how does it work?

Arbitrage describes the act of buying a security in one market and simultaneously selling it in another market at a higher price, thereby enabling investors to profit from the temporary difference in cost per share. The arbitrage strategy can be used in many markets including those for trading stocks and those for currency trading .

What is atomic arbitrage?

Today we’d like to share our knowledge on an exciting and familiar topic from a quantitative perspective: atomic arbitrage. Atomic arbitrage refers to a class of trading strategy in which a buy order on one instrument and a sell order on another equivalent instrument with the same order quantities are (almost) simultaneously filled.

Is an arbitrage trade a low-risk exercise?

An arbitrage trade is considered to be a relatively low-risk exercise. What Is Arbitrage? Arbitrage describes the act of buying a security in one market and simultaneously selling it in another market at a higher price, thereby enabling investors to profit from the temporary difference in cost per share.

What are arbitrage inefficiencies?

These inefficiencies can relate to any aspect of the markets, whether it is price, dividends, or regulation. The most common form of arbitrage is price. Arbitrageurs exploit price inefficiencies by making simultaneous trades that offset each other to capture risk-free profits.