Do you know about arbitrage trading?

Question

Is it better than e-currency trading? Anyone that have actually done this arbitrage trading please let me know. And how profitable it is.

Answer 1

If you are in the United States DO NOT DO currency trading in any form except through a regulated futures market!!!!!!!

EVER!!!!!!!!

Arbitrage trading is buying a guaranteed mistake. For example, imagine IBM and Xerox (XRX) were going to merge on July 1, 2008 and IBM was paying $50 per share for XRX. Both boards have approved it, both sets of shareholders and the regulators. It is June 1, 2008. Since XRX is going to wink out of existence, trading in its shares has fell off because there is no reason to buy it unless you want $50 in one month. Now imagine a very large shareholder needs out today and wants to sell 10,000 shares in a very thin market and so offers to sell at 48. That is over 48% interest to get people to trade their liquidity for money while from the sellers side it is only a 4% loss since they are not annualizing and repeating the proceedure.

Arbitrage is hard as examples happen infrequently but very profitable if you have a good commission structure and you are constantly replacing deals.

Answer 2

There is no special service called as "arbitrage trading" offered by any brokers. If you spot such "arbitrage", you need to trade on your own. Ofcourse clearly means you must buy on one exchange ( where you need to PAY the money for your purchases) and sell on other exchange ( where you need to DELIVER the shares). Problem occures - you MUST give delivery of shares you sold within time frame else you will be slapped a hugh penaly through the "auction" in the markets. Sometimes the total could be almost more than 20% or so which wipes out your capital fast. As a result, rarely you will find individual investors doing "arbitrage" trading. Only brokers deploy teams doing these kind of trades since they have ready stocks to deliver in their accounts. And this is also getting unremunerative as people easily spot the differences and move in to make trades fast due to computerisation of trading.

Answer 3

There are two types of arbitrage. 'Pure' arbitrage is buying and selling the same security simultaneously in two different markets, for instance, buying a stock traded on the Midwest stock exchange and selling it on the NYSE to capture a small difference in price. 'Risk' arbitrage is trading two similar or convertible securities to capture a disparity in their pricing, for example, buying a convertible bond paying a higher coupon/dividend and selling short the underlying common stock to capture the theoretical difference in their values or yield. Or, writing an option contract and buying or selling the underlying security to enhance the yield on the money involved.
Arbitrage trading requires efficient low cost access to multiple markets, and is usually managed via complex computer programs, and requires a substantial amount of capital, but yes, it can be quite profitable.

Answer 4

Is someone trying to sell you a get rich quick scheme? If you're asking about either of these forms of trading here you definitely do not have access to the information to make an informed decision. You also do not know what you are doing. Both forms of trading are very technical.

Answer 5

for info on google arbitrage check out http://www.business-opportunity-reviews.com !