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Arbitrage trades exist because markets are not perfectly efficient. Opportunities arise across a wide range of securities but exist for only a short period of time due to trading activity.

Arbitrage as a trading opportunity exists in stocks, commodities, and currencies and arises because of inefficiencies in these markets. While the Arbitrager will trade to exploit these inefficiencies, the end effect is that these inefficiencies will be resolved by the trading activity itself. In short, Arbitrage Trade involves the simultaneous buying and selling of a security at two different prices in two different markets, potentially resulting in profits without risk. If markets were perfectly efficient, then arbitrage opportunities could not exist. In reality, markets are not perfect, so arbitrage opportunities will arise. What could impede the opportunities to make an arbitrage trade profitable are the costs of making the transactions.


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Warren William

Meet the author behind Smartest-Data. Warren William has a career in Finance and Investments extending over 35 years, both on the Buy Side and Sell Side. His most recent roles include, developing Institutional Risk Management Programs for managing Equity and Fixed Income Risk.  Prior to this Warren William work in Alternative Investments, in Investment Management and as a Buy Side Equity Analyst. Warren William brings a wealth of knowledge and expertise to the table, providing in-depth analysis and commentary on the latest trends in the Stock Markets. Contact information: or Telegram +393339034488

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