arbing

Arbitrage, often shortened to arbing, is a trading strategy that exploits price differences in different markets for the same asset. The core principle is to buy an asset in one market where it is cheaper and simultaneously sell it in another market where it is more expensive, thereby profiting from the price discrepancy. These opportunities are typically fleeting and require rapid execution. Arbing can occur with various assets, including stocks, currencies, commodities, and cryptocurrencies. The success of arbitrage depends on factors like transaction costs, trading speed, and market liquidity. High-frequency trading firms and sophisticated algorithms are often employed to identify and capitalize on these small, short-lived profit margins. While theoretically risk-free if executed perfectly, practical challenges such as slippage (the difference between the expected price and the executed price) and the speed at which prices can change can introduce some level of risk. The existence of arbitrage opportunities is generally seen as an indicator of market efficiency, as these trades tend to push prices towards convergence.