Arbitrage
Arbitrage is a trading strategy that exploits small price differences for a security across markets to lock in profits. For instance, if a share is priced at Rs. 1000 on the NSE and Rs. 1002 on the BSE, a trader can buy it on the NSE and sell it on the BSE, earning a Rs. 2 profit per share. This relies on swift execution, as price gaps are typically minor and fleeting. Arbitrage helps align prices across markets, capitalizing on inefficiencies for low-risk gains.
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