rhizoverbBeta
DictionaryarbitrageTrading on price differences
noun / verb

arbitrage

AHR-bih-trahzh/ˈɑːrbɪtrɑːʒ/

Trading to profit from price differences between markets.

The trader uses arbitrage to exploit a price difference between exchanges.

An older woman executes paired trades on two side-by-side market screens: buying one standardized copper unit for $5 in one market and selling an identical unit for $8 in another.
Etymology
arbitrOld Frenchto arbitrate, judge
+ageOld Frenchaction or process

Built on “to judge,” arbitrage first meant arbitration or the exercise of judgment. Its financial sense concerns calculating temporary price differences between markets and doing business to profit from them.

In context

Old World Wealth1:08
mountain caravan masters ran the most brutal caloric arbitrage in history scooping up free salt from the Tibetan plateau dragging it across 18,000 foot glaciers and trading it pound for pound for the grain
The Economics of Owning a Salt Route Caravan Through the Himalayas

More examples

  • The opportunity for arbitrage vanished within seconds.
  • The firm arbitrages small differences in currency prices.
  • They were arbitraging the gap between the two markets.

Forms

arbitrage · arbitrages · arbitraged · arbitraging

Similar words

speculation
Profits from expected price movements rather than simultaneous market differences.
trading
A broad activity that need not exploit differing market prices.