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Arbitrage

In trading, arbitrage is the practice of buying a financial instrument in one market and simultaneously selling it in another market. Arbitrage is intended to profit from the difference between the market prices.

For instance, suppose in New York the USD/JPY (usd/jpy) exchange rate is $1 = ¥90, while in Tokyo the usd/jpy exchange rate is $1 = ¥100. Buying $1 with ¥90 in New York and selling that $1 for ¥100 in Tokyo, for a profit of ¥10, would be a forex arbitrage example.
See also : spread.

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