Arbitrage occurs as the result of market inefficiencies and is the practice of buying and selling an asset in different markets at the same time in order to benefit from price difference.

Is it often that traders talk about “Arbitrage” trading method as it is profitable and almost not risking his/her funds to do it at all.

Some ask for How to do it and some ask for where to do it.

But there are things that you must know before start trading by “Arbitrage”.

“Arbitrage” is possible

Arbitrage trading method can be done in many ways.

You can do with price differences of 2 brokers, use 3 brokers to hedge triangularly, differences of swap points or even with not the same but different symbols.

It is easily possible, as long as you have access to several brokers or markets.

All you need to do is to find brokers(or liquidity providers) with different market price, Swap points or time lags.

“Arbitrage” is prohibited

It is often that “Arbitrage” trading is prohibited by brokers, as it is just costing the brokers to support and or it just won’t be a profit for brokers.

Even brokers with STP or ECN conditions cannot allow “Arbitrage” especially on CFD contracts.
*STP = Straight Through Processin and ECN = Electronic Communication Network.

If you are planning to make profit in this way, you are recommended to first ask your account managers.

Otherwise your brokers may take necessarily actions such as closing positions forcefully, freezing your accounts or etc…