Arbitrage refers to the low-risk exploitation of price differences between identical products or services in two different markets.

Stock market example: An arbitrageur can buy securities or currency on one stock exchange, and almost simultaneously sell those same assets at a profit on another stock exchange without having to front large amounts of capital or take on a lot of risk.

With the advent of algorithmic trading and high frequency trading, human arbitrageurs are increasingly being replaced by computers which are capable of processing a large number of transactions within seconds.

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