Arbitrage is when an asset (stocks, currencies, etc.) is bought in one market and sold in another for a higher price. An arbitrage is a transaction that involves no negative cash flow at any probabilistic or temporal state and a positive cash flow in at least one state.An arbitrageur is an investor who attempts to profit from market inefficiencies. An arbitrage involves buying an asset on one market while simultaneously selling the same asset on another market for a higher price. Arbitrage is a trading strategy that exploits an assets' price or information discrepancies for profit. These differences arise due to market inefficiencies. Arbitrage is the process of simultaneously buying one instrument and selling another security short (also known as shorting a security) Arbitrage is when you have negative net worth in one period (you owe) and positive in the next (you no longer owe, other people may even pay you money).