#ArbitrageTradingStrategy Arbitrage trading is a strategy aimed at exploiting price differences between different markets.

In theory, arbitrage should be impossible, as markets are efficient and all prices should reflect the current market value. However, small discrepancies still exist due to geography and technology; for example, delays can occur in information as price data is transmitted from one place to another.

In a pure arbitrage operation, a trader will find a currency, commodity, or stock with a different price on two different exchanges. They would buy at the lower price and sell at the higher price.

The concept is often compared to buying collectibles, such as art, sneakers, or antiques. People buy them in one place (in a store) and sell them directly in another (online markets) for a profit. The important thing is not the asset, but the ability to leverage demand for personal gain.

Example of arbitrage trading

Suppose company ABC is listed in the UK and Australia. On the London Stock Exchange, the price of its shares rises from £30.00 to £30.10, but on the Australian Stock Exchange, the price of its shares remains at £30.00.

A trader could buy on the LSE and immediately sell on the ASX, making a profit of 10 pence per share.