In finance, the term arbitrageur denotes a person or entity which uses arbitrage to profit from differences in prices charged for the same product in two different markets at little or no risk.
Example 1: Suppose the CHF/USD currency pair traded at CHF 0.97 to USD 1 on one exchange and at CHF 0.98 to USD 1 on another exchange. A forex trader with access to both exchanges could purchase dollars at the lower price (0.97 centimes) and simultaneously sell them on the second exchange at the higher price (0.98 centimes per dollar), clearing 1 centime per dollar sold at zero risk.
Example 2: An arbitrageur takes out a loan in a country where interest rates are low, and lends the money out in a country where interest rates are high. The difference between the low interest which they pay for capital and the high interest which they earn makes up their profit.
Example 4: Buyers on cryptocurrency exchange number 1 are offering 200 francs more per bitcoin than sellers on cryptocurrency exchange number 2 are asking. An arbitrageur could take advantage of this situation by buying bitcoin on exchange 2 and then selling it on exchange 1, pocketing the difference of 200 francs per bitcoin sold.
More on this topic:
Forex trading platform comparison
