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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john vera Says:
February 3rd, 2011
Posted at: 8:03 pm
how could profits be made on the basis of the difference between closing prices of the same stock on two different exchanges like nse and bse
Deepak Says:
March 2nd, 2011
Posted at: 1:12 pm
Actual details about arbitrage...
http://shenwabox.blogspot.com/2011/02/arbitrage-in-indian-stock-markets-dont.html
Don't read this if you're keen on arbitrage. It's not good news. =(
Chandan Says:
March 12th, 2011
Posted at: 1:17 pm
how to do commodity arbitrage from home.....plz help me..
atik Says:
April 20th, 2011
Posted at: 11:53 am
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 Surat or Gujarat ? Please recommend any institute.pls mail me or call me on
+91 98799 14045
[email protected]
karan Says:
April 24th, 2011
Posted at: 10:46 pm
wats seedha saudha nd ulta suadha do v hv to square up our position in seedha saudha
Sharmila Says:
April 26th, 2011
Posted at: 2:55 pm
Is is required to hold shares in advance?? Suppose I do not own shares in Arbitrage opportunity is available, in this case can i short sell in one market and buy back from another???
pawan p narayan Says:
May 11th, 2011
Posted at: 12:01 pm
i know about arbitrage but I want to more 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 mumbai? Please recommend any institute.pls mail me
manvender Says:
July 17th, 2011
Posted at: 5:21 pm
sir pls gv me detail of arbitrage course fee & institute my no is 9412557897 near about delehi
prakash v Says:
August 23rd, 2011
Posted at: 1:39 pm
i want arbitrage trading in cash to cash.but i don't knowledge....investment kitna or trading system kase kaam karta hai.
HITESH KUMAR Says:
August 26th, 2011
Posted at: 6:36 pm
SIR
HITESH KUMAR ARBITRAGE 3 YEAR EXPRESTION
CONTACT NUMBER 9999935909
THANKS
HITESH KUMAR Says:
August 26th, 2011
Posted at: 6:37 pm
PLZ SIR
shirish jain Says:
August 28th, 2011
Posted at: 10:46 am
I WANT TO KNOW ABOUT ARBITRAGE TRADING SHARE AND COMMODITY MARKET.PLZ GIVE ME KNOWLEDGE ABOUT IT. mob 9887054323 9828278333
KLM Says:
September 6th, 2011
Posted at: 2:44 pm
aCTUALLY ARBITRAGE TRADING IS NOT POSSIBLE IN INDIAN MARKET. PLZ CONSULT WITH BROKERING COMPANY
manoj Says:
September 20th, 2011
Posted at: 8:05 pm
i m started arbitrage but i dont know that which company is best in arbitrage trading and who is best & easy use software in arbitrage trading.
pls give me a best answer for me. i m waiting ur ans & help.
plsss help me
Abhay Says:
May 22nd, 2012
Posted at: 1:58 am
I don't no about arbitrage trading 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(NCR)? Please recommend any institute. pls. mail me or call me on
+91 9911328168
pradip Says:
June 13th, 2012
Posted at: 10:33 am
Hi karan, sidha sauda means
eg: on nse acc bought 1190 and on bse sold at 1195
ulta sauda is eg: on nse acc sold @1196 & on bse bought 1196