What is Arbitrage Trading ?

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What is Arbitrage Trading ?

This article was posted on Jun 29, 2008

“Arbitrage” trading is simply the trading of securities when the opportunity exists during the trading day to take advantage of differences in value between the markets the trades are made within. Arbitrage trading takes place all day long on most days that the markets are active.

Arbritrage is legally allowed. In fact arbitrage is responsible for a large part of the daily volumes on the NSE & BSE exchanges.

What mainly takes place in India is called Market Arbitrage
Market Arbitrage involves purchasing and selling the same security at the same time in different markets (BSE & NSE) to take advantage of a price difference between the two separate markets. A market arbitrageur would short sell the higher priced stock and buy the lower priced one. The profit is the spread between the two assets.

Here is a simple example:

Suppose you own 600 shares of RPL. One trading day you notice that RPL is trading at 150 on the BSE and 145 on the NSE. You sell your 600 shares on the BSE at 150 and simultaneously buy back the 600 shares on the NSE at 145.

You profit in this case is 600*5.00 = 3000.00 less brokerages if any.

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82 Responses

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sandeep nagar Says:
May 17th, 2010
Posted at: 8:27 pm
i want to learn arbitrage in mumbai can any one recommand any institute.
vinoth Says:
May 18th, 2010
Posted at: 5:03 pm
Could somebody please let me know which brokeages allow arbitrage???
seema Says:
May 25th, 2010
Posted at: 11:42 am
hi!
i want to come in this line.would you guide me?????????????
Pradeep Gupta Says:
June 1st, 2010
Posted at: 12:32 pm
i want all detils regarding arbitrage along with course fees, & want to know future opportunities.. pls mail me..
SURESH CHUGH Says:
June 14th, 2010
Posted at: 11:24 pm
I want to learn arbritage trading , where do i contact for that in delhi? Please recommend any institute.
yash Says:
June 24th, 2010
Posted at: 12:06 pm
i have 1 year expirence in s.market done arbitraging & jobbing for 2 monts need job
yash Says:
June 24th, 2010
Posted at: 12:10 pm
my no 9321507311
Rikin Says:
July 25th, 2010
Posted at: 7:22 pm
I want 2 know about arbitrage, its course, its fees, 4m wer it is done, etc. So pls guide me, Mail me.
Deepak choudhary Says:
August 5th, 2010
Posted at: 9:58 pm
i dontno about arbitrage I want to learn arbritage trading i want all detils regarding arbitrage along with course fees, & want to know future opportunities.. where do i contact for that in delhi? Please recommend any institute.pls mail me
Deepak choudhary Says:
August 5th, 2010
Posted at: 10:06 pm
I don no about arbitrage I want to learn arbitrage trading I want all details regarding arbitrage along with course fees, & want to know future opportunities... Where do I contact for that in Delhi? Please recommend any institute. mail me this ID:
[email protected]
Prasun Says:
September 10th, 2010
Posted at: 1:48 pm
i want to know all about arbitrage.
Prasun Says:
September 10th, 2010
Posted at: 2:21 pm
hi i am prasun,
ram Says:
September 14th, 2010
Posted at: 9:42 pm
is it possible in the same day or not please tell me
freni Says:
October 5th, 2010
Posted at: 3:40 pm
i want start up with arbitrage, but dont have proper knowledge about it . And want to know about the courses in bangalore, n whats the qualifacation required for it . so if u can guide me regarding this it wil be of gr8 help to me
afroz Says:
October 26th, 2010
Posted at: 11:22 am
I run an institute and i want to start arbitrage.Please contact me for more detail
afroz Says:
October 26th, 2010
Posted at: 11:24 am
I run an institute and i want to start arbitrage.Please contact me for more detail. 9917275494