# arbitrage

/ˈɑɹbɪˌtɹɑʒ/ (US) · /ˈɑːbɪtɹɪdʒ/ (UK) · CEFR C1 · Noun

Source: https://englishreference.com/word/arbitrage
Updated: 2026-05-25

## Definition

the practice of buying something in one place at a low price and selling it in another place at a higher price to make a profit. It usually involves different markets or different times.

For teachers: the simultaneous purchase and sale of the same or equivalent financial instruments in different markets to profit from price discrepancies. Often involves low risk due to the immediate nature of the transactions.

## Examples

- He makes money through arbitrage by trading on different stock exchanges.
- Currency arbitrage allows traders to exploit minor differences in exchange rates between different banks to generate a risk-free profit.
- While pure arbitrage opportunities are rare in highly efficient markets, sophisticated algorithms can still identify and execute trades before the price gaps close, effectively locking in a guaranteed return.

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