arbitrager
1
8.8
- noun
- /ˈɑːrbɪtrɑːdʒər/
- Specialized
- In this way, arbitragers can make huge profits from even small price discrepancies due to interest rate differentials.
- arbitrager would buy
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Watch on YouTubeSo why would an arbitrager choose to do this, to tie up this much capital and to take these risks?
- So why would an arbitrager choose to do this, to tie up this much capital and to take these risks?
Examples
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A simple example of how an arbitrager can make money doing this is by selling when the carry cost he can collect is at a premium to the actual carry cost of the contract sold.
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But presumably the people who pay for a washing machine could have gotten it for free if our arbitrager hadn't snapped it up first.
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So why would an arbitrager choose to do this, to tie up this much capital and to take these risks?
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What do you think is the most important quality for a great arbitrager?
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With the arbitrager in place, all prices would be similar, and so nobody would need to spend 5 minutes looking through the listings for good deals.
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You need to compare the sum total of this lost time for everybody (say 5 minutes times 50 people) to the money the arbitrager makes (say $50).
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Arbitragers are investors who attempt to take advantage of interest rate differentials between the foreign exchange spot rate and either the forward or futures contracts.
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This implication is that this saves people tons of time because they won't bother looking for the cheap deals since the arbitrager has eliminated them all.
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An experienced arbitrager can capitalize on price fluctuations in different markets to maximize profits.
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The arbitrager quickly identified a price difference between the stock exchanges and made a profitable trade.
Synonyms
195
2.1
A person or company that buys and sells things to make money
1
9.9
A person who buys and sells the same item in different markets to profit from price differences
1
9.9
A person who buys and sells the same thing in different markets to make a profit
Surface Forms
Morphology
Etymology
Arbitrager comes from the same root as arbiter, a person who 'judges' or 'decides', so picture someone deciding which market price is best. That's why an arbitrager buys where something is cheap and sells where it is expensive to make money.