How Does Arbitrage Contribute to Market Efficiency? What Are the Most Common Pitfalls in Arbitrage Trading for Beginners?Arbitrage is the simultaneous purchase and sale of the same asset in different markets in order to profit from a difference in its price. For issuers of tax-exempt bonds, these challenges can largely be summed up in a single word: arbitrage. How to Invest in ETFs for Beginners. Exchange-traded funds let an investor buy lots of stocks and bonds at once. Arbitrage is a municipality's profit from borrowing funds in the taxexempt market and investing them in the taxable market. Arbitrage is the strategy of taking advantage of price differences in different markets for the same asset.