Arbitrageur

Arbitrageurs are experienced traders who buy & sell securities simultaneously from different markets to make profit from difference in price. These securities could be shares, bonds, commodities, currencies or instrument that can be easily bought & sold.

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1. Arbitrageur By:- eFinanceManagement.com

2. Content Who are Arbitrageur? Are Arbitrageur Risk Averse? Crypto Arbitrageur

3. Who are Arbitrageur? Arbitrageurs are experienced traders who buy & sell securities simultaneously from different markets to make profit from difference in price. These securities could be shares, bonds, commodities, currencies or instrument that can be easily bought & sold. For example, Investor A finds out that a share of company X are traded on NYSE (New York Stock Exchange) for $10 and the same share is traded on LSE (London Stock Exchange) for $11. So, he will buy these shares from NYSE and will sell on LSE to earn a profit of $1 per share. Arbitrageur also tries to earn profit by using private information about the company. They would buy or sell shares on the basis at present to make profit in future. Basic characteristics of an arbitrageur:- He must be quick to execute transactions. He must be detail-oriented. Ready to take risks. Should be able to identify price inefficiencies.

4. Are Arbitrageur Risk Averse? Generally, arbitrage is a risk free trade but the price difference exists for short time period and hence, if the investor does not execute a transaction quickly, he may incur losses. Also, the margins between the different markets are very small due to which the investors may suffer loss as the transaction cost are generally higher than the margin between two different markets. Therefore, the arbitrageurs have to consider the transaction cost while conducting arbitrage trade. It also become risky at the time of merger, when it is also super-active as merger usually results in price difference of the securities. It may also lead to loss if the merger transactions don’t get completed.

5. Crypto Arbitrageur Cryptocurrency market is a relatively new financial market. And as these cryptocurrencies are highly volatile, they attract arbitrageurs by offering arbitration opportunities. REFERENCE: To know more about it, click on the link given below: https://efinancemanagement.com/derivatives/arbitrageur