LONG ARBITRAGE Meaning and
Definition
-
Long arbitrage is a strategy employed in financial markets by investors to make a profit through the simultaneous buying and selling of assets or securities. It involves taking advantage of price discrepancies between two or more markets, usually by purchasing an undervalued asset and selling it at a higher price in a different market or at a later date.
In the context of long arbitrage, the term "long" refers to the ownership of an asset with the goal of profiting from its subsequent appreciation. This strategy assumes that the price of the asset is expected to rise in the future, enabling the investor to sell it at a higher price and generate a profit.
Arbitrage, on the other hand, refers to the act of capitalizing on differences in prices or rates across markets to obtain risk-free returns. By executing a long arbitrage trade, investors are essentially seeking to exploit pricing inefficiencies that exist in the market, aiming to benefit from the eventual convergence of prices.
Long arbitrage can be applied to various financial instruments, such as stocks, bonds, commodities, or currencies. It requires a deep understanding of market dynamics, access to multiple markets, and sometimes complex trading strategies. Proper risk management and continuous monitoring of market conditions are crucial in executing successful long arbitrage trades, as they entail exposure to market fluctuations and other associated risks.
Common Misspellings for LONG ARBITRAGE
- kong arbitrage
- pong arbitrage
- oong arbitrage
- ling arbitrage
- lkng arbitrage
- llng arbitrage
- lpng arbitrage
- l0ng arbitrage
- l9ng arbitrage
- lobg arbitrage
- lomg arbitrage
- lojg arbitrage
- lohg arbitrage
- lonf arbitrage
- lonv arbitrage
- lonb arbitrage
- lonh arbitrage
- lony arbitrage
- lont arbitrage
- long zrbitrage
Etymology of LONG ARBITRAGE
The word "arbitrage" derives from the Middle French term "arbitrer", meaning "to give judgment" or "to decide". It entered English through the Old French word "arbitrage" in the early 15th century. The word "long" in "long arbitrage" refers to the strategy of buying a financial instrument (such as stocks, bonds, or commodities) with the expectation that its price will rise in the future, thereby making a profit. The use of "long" in this context comes from the concept of "going long" or having a positive position in a particular security or asset. Hence, "long arbitrage" refers to engaging in arbitrage operations with the expectation of profiting from the increasing value of the asset being traded.
Infographic
Add the infographic to your website:
