Definition of Arbitrage Selling

When a person buys security from one market at a certain price, and sells it in another market at a higher price, the process is known as Arbitrage Selling.

Points to remember:

• The profit earned by such selling is due to a temporary difference between the prices of the security in different markets.
• It is also considered as riskless profit for the trader.

Example:

If the price of Reliance Stock in NSE is Rs. 1000 and in BSE is Rs. 1000.10 then a trader can purchase the stock in NSE and sell it in BSE to make a profit.