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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.

82 Responses

Comment pages: 123456Show all

  1. Sam Says:
    August 9th, 2012
    Posted at: 2:46 pm

    Rates are definitely different in between different stock exchanges for the same stock or commodity as well. It may be inter country or intra country. For more details contact me on [email protected]

  2. mohit bisht Says:
    September 25th, 2012
    Posted at: 5:16 pm

    i am looking forward to the arbritrage trading but still i have some question if you guys can sort it out
    do we need to open two trading account ?
    and evry details if youy can provide me that will be very helpul for me..pls reply asap

  3. [email protected] Says:
    December 8th, 2012
    Posted at: 6:45 am

    pl give the procedure of arbitrage

  4. News Analysis Says:
    January 17th, 2013
    Posted at: 3:32 pm

    Hi, i feel that i noticed you visited my web site thus i got here to go back the choose?.I am trying to find things to enhance my site!I guess its adequate to make use of a few of your ideas!!

  5. Akshay Says:
    February 23rd, 2013
    Posted at: 8:04 pm

    I wish to enroll my self for the Arbitrage corse
    Kindly contact me on 9833680380

  6. Omkar Phadnis Says:
    April 9th, 2013
    Posted at: 10:55 am

    Hi,i know Arbitrage but plz.give me extra info.
    kindly contact me on:940-435-8858

  7. vijay Says:
    June 27th, 2013
    Posted at: 12:26 am

    i want to know more about arbitrage trading, can you provide me with some details or some lead..My number is 08086340253

  8. Sop Says:
    January 16th, 2014
    Posted at: 11:21 am

    i want to learn about arbitrage trading please advise me

  9. Nikita Sharma Says:
    May 7th, 2014
    Posted at: 1:50 pm

    want to learn arbitrage trading pls help, call 8411954870

  10. oafm Says:
    July 7th, 2014
    Posted at: 11:27 am


  11. vijayan Says:
    July 15th, 2014
    Posted at: 2:58 pm

    I need help for ARBITRAGE trading. both option and stocks.
    how trade arbitrage. where i buy arbitrage software. we need full details for arbitrage.
    please replay me.

    Call: 9940571606
    Email: [email protected]

  12. Dhananjay Mohankar Says:
    August 4th, 2014
    Posted at: 11:44 pm

    Hii All Friends, I am a Arbitrage Trader, u can call me for information about Arbitrage Trading.

  13. universal group Says:
    October 6th, 2015
    Posted at: 9:48 pm

    Hi manoj, Hi manoj, http://profit.ndtv.com/market/arbitrage-opportunity
    see this link.

  14. Stock Cash Tips Says:
    November 7th, 2015
    Posted at: 11:35 am

    i love t read your post wait for new post

  15. sonal Says:
    August 29th, 2018
    Posted at: 12:45 pm

    i know that what is arbitrage but in nse & bse don't know that when we are done a position with 5 r, gap example:- mhril purchase in nse in 500 q. Buy= 256 and in Bse 500 q. Sell 271. than in the last what do in next position

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