arbitraging
Profiting from discrepancies
Arbitraging is the practice of exploiting price differences for the same asset across different markets—buying where it's cheap and selling where it's expensive to capture the spread.
The term applies to stocks, currencies, commodities, or any tradable good: She made a fortune arbitraging oil futures between London and New York.
The word often appears in contexts suggesting sophisticated or opportunistic trading.
Noncommittal maneuvering
- triangularThree-cornered in form
- statisticalRelating to data analysis
- pairsMatched sets of two
- convergenceProcess of approaching sameness
divergence · mispricing · inefficiencies · simultaneous · algorithmic · high-frequency · quantitative · spatial
Produce or relinquish
- gainPositive return received
- returnGo back again
- spreadTo distribute widely
- differentialRelative difference between things
premium · discount · margin · windfall · alpha · carry · extraction · capture
State of being unprotected
- volatilityRapid, unpredictable changeability
- executionCompleting a planned task
- slippageGradual loss or decline
- counterpartyOther side in deals
liquidity · timing · regulatory · leverage · crowding
Currency trading market
- equitiesOwnership stakes in corporations
- commoditiesTradeable raw materials
- securitiesTradeable financial assets
- derivativesThings derived from another
futures · options · bonds · spreads · cryptocurrency · fixed-income · exchanges · currency
Involving official oversight
- taxMandatory public revenue charge
- loopholeExploitable gap in rules
- jurisdictionalConcerning legal authority bounds
- laborStrenuous effort; also childbirth
wage · predatory · rent-seeking · gaming · circumvention · asymmetry
hedging
Noncommittal maneuvering
- triangularThree-cornered in form
- statisticalRelating to data analysis
- pairsMatched sets of two
convergence · divergence · mispricing · inefficiencies · simultaneous · algorithmic · high-frequency · quantitative · spatial · temporal
yield
Produce or relinquish
differential · premium · discount · margin · windfall · alpha · carry · extraction · capture
exposure
State of being unprotected
- volatilityRapid, unpredictable changeability
- executionCompleting a planned task
- slippageGradual loss or decline
counterparty · liquidity · timing · regulatory · leverage · crowding
forex
Currency trading market
- equitiesOwnership stakes in corporations
- commoditiesTradeable raw materials
- securitiesTradeable financial assets
derivatives · futures · options · bonds · spreads · cryptocurrency · fixed-income · exchanges · currency · ETF
regulatory
Involving official oversight
- taxMandatory public revenue charge
- loopholeExploitable gap in rules
- jurisdictionalConcerning legal authority bounds
labor · wage · predatory · rent-seeking · gaming · circumvention · asymmetry
arbitragingspeculating
Guessing without certainty
gambling · betting · wagering · risk-taking · punting
arbitragingvalue investing
Buying underpriced stocks fundamentally
speculating · holding · swing trading · day trading · accumulating