What are the types of arbitrage?
There are several types of arbitrage, including spatial arbitrage, temporal arbitrage, and statistical arbitrage. Would you like to know more about any specific type?
Can you explain spatial arbitrage?
Spatial arbitrage involves taking advantage of price differences for the same asset in different locations. For example, if gold is cheaper in one country than another, a trader can buy in the cheaper market and sell in the more expensive one.
What about statistical arbitrage?
Statistical arbitrage uses mathematical models to identify price discrepancies between related financial instruments. Traders often use algorithms to execute these trades quickly.
Are there risks involved in arbitrage?
Yes, while arbitrage is generally considered low-risk, it can involve risks such as execution risk, market risk, and liquidity risk. It's important to be aware of these before engaging in arbitrage.
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