Arbitrage -

While often described as "free money," several factors can erase profits:

: A trader (often a computer) finds a price difference for the same asset on two different exchanges.

Arbitrage is the practice of simultaneously buying and selling an asset in different markets to profit from a price discrepancy. It is a "risk-free" strategy in theory because the profit is locked in at the moment of the trade, though in practice, it requires extreme speed and sophisticated technology. How Arbitrage Works arbitrage

: Buying a convertible security (like a bond) and shorting the underlying stock to profit from mispriced options.

: Buying and selling the exact same financial instrument (like a stock or currency) across different exchanges. While often described as "free money," several factors

: Buying physical goods (e.g., collectibles, thrift store finds) in one location to sell immediately for a higher price on another platform. Key Risks & Challenges

: Betting on the success (or failure) of a corporate merger by buying the target company's stock and shorting the acquirer's stock. How Arbitrage Works : Buying a convertible security

: They buy on the cheaper exchange and simultaneously sell on the more expensive one.