By Investment U Research Team Arbitrage trading is about as close to real-time, instant profit-taking as you can get. Rather than trade the price of a security in relation to itself, arbitrage capitalizes on the different value of the same security across markets. The great thing about arbitrage is that it applies to any type of security, so long as it’s cross-listed on different exchanges.
There are two types of arbitrage: pure and risk arbitrage. Pure arbitrage is the real-time exchange of securities for a profit. Let’s look at a very simple example:
The Widget Company (WGT) is listed on both the New York Stock Exchange …read more
