Arbitrage
The simultaneous purchase and sale of an asset in order to profit from a difference in the price. This usually takes place on different exchanges or marketplaces.

Also known as a "riskless profit".

Investopedia Says:
Here's an example of arbitrage: Say a domestic stock also trades on a foreign exchange in another country, where it hasn't adjusted for the constantly changing exchange rate. A trader purchases the stock where it is undervalued and short sells the stock where it is overvalued, thus profiting from the difference. Arbitrage is recommended for experienced investors only.

Related Terms:
Arbitrage Trading Program - ATP
Arbitrage-Free Valuation
Efficient Market Hypothesis - EMH
Exchange Rate
Forex - FX
Futures Spread
Market Arbitrage
Outward Arbitrage
Triangular Arbitrage
Uncovered Interest Rate Parity - UIP

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