Arbitradging is word that traders and Ebay flippers likes to use in 2020. But for this post, I want to focus on the Financial Meaning of Arbitrading.
Arbitraging or Arb is the act of buying an asset from one exchange and simultiounsly selling it on another exchange for the purpose of making a small profit.Arb is not like the traditional buy and hold strategies or even buying and selling (trading) on a daily or weekly basis. The only way that Arb can take place is within the absolutely certainty of profit between 2 exchanges.
The same goes for Ebay Flippers. Someone who is in the business of buying and selling goods from dirrent online stores or marketplaces just to sell them on another one for a higher price can also be viewed as Arb. Because of the knowledge that the product is definitely selling for a higher price on another website.
What Is Arbitrage?
Arbitrage is the purchase and sale of an asset in order to profit from a difference in the asset’s price between markets. It is a trade that profits by exploiting the price differences of identical or similar financial instruments in different markets or in different forms. Arbitrage exists as a result of market inefficiencies and would therefore not exist if all markets were perfectly efficient.
Definition provided from Investopedia