#ArbitrageTradingStrategy

Arbitrage trading capitalizes on temporary price discrepancies for the same asset across different markets or forms. The core principle involves simultaneously buying low in one market and selling high in another, locking in a risk-free profit. For instance, a stock might trade for $10.00 on the NYSE and $10.05 on the NASDAQ. An arbitrageur would buy on the NYSE and instantly sell on the NASDAQ, earning $0.05 per share (minus transaction costs). This strategy relies heavily on speed and technology, as these inefficiencies are often fleeting due to high-frequency trading and market efficiency. While theoretically risk-free, practical challenges include execution delays, liquidity constraints, and transaction fees that can erode profits.