Simply put, if you have a legitimate opportunity which involves purchasing an asset from let's say broker #1 and selling it to broker #2 for more, you have an arbitrage equation on your hands.
The idea of arbitrage sounds great, right?
Simply buy some stocks from one place and sell them somewhere else for more. Or bond arbitrage, forex arbitrage, even cryptocurrency arbitrage (to refer to an example you'll come across in this video)... the list could go on and on.
As explained in this video, the idea of arbitrage is simple enough to wrap your head around. However, as simple as it is to define arbitrage, how difficult is it to execute all of this properly and especially sustainably?
Very!
As I have tried to explain through this animation, arbitrage opportunities are usually taken advantage of by sophisticated financial industry players, with there being a lot of automation involved. While the average individual can try anything from stock market arbitrage to crypto arbitrage on for size, the likelihood of hitting ti big and especially hitting it big in a sustainable manner is very low.
However, even as a small-timer, knowing how to spot an arbitrage opportunity is a great tool to have in your arsenal.