What Is Arbitrage?

John23 · #1 (**permalink**) 06-14-2010, 01:56 PM

Hi Friends,

I Would be highly thank full of you if you will explain me about "Arbitrage" in details. i was heard about this word but i don't know the meaning of this.

candiid · #2 (**permalink**) 06-14-2010, 02:44 PM

The opportunity to buy an asset at a low price then immediately selling it on a different market for a higher price." If I can buy an asset for $5, turn around and sell it for $20 and make $15 for my trouble, that is arbitrage. The $15 I gain represents an arbitrage profit.

riaviente · #3 (**permalink**) 07-05-2010, 01:05 AM

Arbitrage is a simultaneous purchase and sale of an asset in order to profit from a difference in the price. It is a trade that profits by exploiting price differences of identical or similar financial instruments, on different markets or in different forms.

Banner Stands · #4 (**permalink**) 07-05-2010, 08:02 PM

Hi,

Both of the above explanations are entirely correct. If you search on Wikipedia there are some more detailed explanations and examples.

DaveSpencer · #5 (**permalink**) 07-15-2010, 10:35 PM

People use to do arbitrage with Google Adwords and Adsense.

They use to have Adsense ads on their site in places to get lots of clicks with low quality content, they use to then send visitors to their Adsense site via Adwords and make more money from Adsense on average per visitor than they was spending on Adwords. They use to call this arbitrage.

Google has cracked down on this though with getting stricter on what sites are linked to via Adwords plus also the quality of the pages where their ads are displayed on via the use of Adsense.