Arbitrage is a term used in finance and investing. In short, arbitrage involves the practice of buying an asset at a lower price in one market and selling it at a higher price in another market, aiming to make a profit through exploiting price discrepancies. It requires quick action and is typically a strategy employed by experienced investors and traders.

Imagine you have two markets, Market A and Market B, where the same asset is being traded. In an arbitrage opportunity, you would buy the asset at a lower price in Market A and sell it at a higher price in Market B. The key is to do this quickly and efficiently to exploit the price difference.

Arbitrage can occur due to various factors such as differences in supply and demand, exchange rates, or even time zone differences. It is essentially a way to capitalize on market inefficiencies. However, it is important to note that arbitrage opportunities are often short-lived, as the market quickly adjusts to eliminate the price difference. As a result, arbitrage is commonly pursued by professional traders who have access to advanced technology and fast trading systems.

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