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. The act of buying and selling goods simultaneously in different markets to gain an immediate profit.Impressive, but tricky. Arbitrage is when an asset (stocks, currencies, etc.) is bought in one market and sold in another for a higher price. Arbitrage. A situation in which it is possible to buy an asset in one market and then sell it immediately in another market at a higher price. Arbitrage involves buying an asset in one market at a lower price and simultaneously selling it in another market at a higher price. The simultaneous purchase and sale of the same securities, commodities, or foreign exchange in different markets to profit from unequal prices.