noun

arbitrage

/ˈɑːrbɪtrɑːʒ/ · say it: AR·bi·trahzh

profiting from price differences of the same asset in different markets

In more detail

1. (noun) the practice of buying something in one place and immediately selling it in another place to make a profit from the price difference

2. (noun) the profit made from this activity

Examples

Currency arbitrage involves buying dollars in one country and selling them in another where they're worth more.
Traders made a quick arbitrage by purchasing the stock on a cheaper exchange and selling it on an expensive one.

How to use arbitrage

Arbitrage is primarily a financial and investment term, used to describe the practice of exploiting price discrepancies across markets. It typically appears in discussions of trading, finance, and economics, often with the connotation of a sophisticated or technical strategy. The term is neutral, neither pejorative nor laudatory, though excessive arbitrage can sometimes suggest market inefficiency.

Common phrases

arbitrage opportunity
arbitrage profit
currency arbitrage
statistical arbitrage
engage in arbitrage

Synonyms

price differential trading · profit taking from price differences · exploitation of market inefficiencies

Word family

arbitrageur (noun), arbitrage (verb)

A common mistake

Learners sometimes confuse arbitrage with speculation; arbitrage involves nearly risk-free profits from existing price differences, while speculation involves taking calculated risks on future price movements.

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