Definition of Pure Arbitrage

Financial Terms Beginning with P

What is Pure Arbitrage

Pure arbitrage is the most basic form of arbitrage in which an investor simultaneously buys and sells a security in different markets to take advantage of a price inefficiencies. Pure arbitrage is also possible in forex trading where foreign exchange rates lead to pricing discrepancies.

As technology has advanced and trading has become increasingly digitized, it’s grown more difficult to take advantage of these scenarios, as pricing errors can now be rapidly identified and resolved. This means the potential for pure arbitrage has become a rare occurrence.

Glossary of Terms and Phrases

A financial dictionary or glossary is an essential tool to better understand the meaning of a specialized term or phrase. It would obviously make life much easier if everyone spoke the same language and used the same financial terms and phrases but that is not realistic.

We learn new languages to communicate with each other, transact business globally and to appreciate other cultures. Global finance is a specialized language that if understood and mastered, it will provide benefits that help to decrease risk and improve investment returns. Financial literacy is the foundation of developing good investment strategies and sound decision making.

Related Investment Terms


Hedge Fund


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