How to Make Money in Arbitrage
The designer brand Chanel once came up with a collection that featured Zardosi Work. Zardosi or Zari Work is a beautiful and intricate craft of weaving threads made of fine Gold or Silver and are later entwined in various types of fabric to make fine patterns. Apart from the monetary worth, the fabric attains a rich and grand look.
The craft of Zari has been long associated with the aristocracy and royalty in India and considered to be one of the most detailed embroidery techniques in existence.
The origin of the Zari embroidery is traced back to a village by the same name in modern-day Iran which was then brought to India by Persians during the Rig Veda. The Zari craft truly got recognized during the patronage of the famous Mughal emperor Akbar.
The exclusivity of the Zari embroidery grew during modern times when it got confined to certain pockets in the country like Lucknow and Chennai.
Zardosi though woven with gold is done by local craftsmen in the alleys of Chennai. Now the question that arises is how much does a craft do by a daily wager in a dirty alley cost and how much does a Chanel haute couture cost?
Do keep in mind that both are done by the same person but portrayed in two very different platforms.
This is a situation that can be compared to what an Arbitrage is. Arbitrage, in other words, can be explained as taking advantage of price differentials in two different platforms. It is mostly applied in Currency trading overseas, Bombay Stock Exchange (BSE) and National Stock Exchange of Indian (NSE). This process happens because of the demand and supply theory when shares are traded in NSE and BSE exchanges simultaneously, there is bound to be some difference in rates and this is the factor that we intend to take advantage of.
When the share is less in one exchange we buy it and sell it in the other exchange where the rate is high. This differential thus leads to a profit
According to Economictimes in real life, arbitrage opportunities exist only for brief periods since most of the arbitrage trading has been taken over by algorithm-based trading in matured markets. These algorithms are quick to spot and capture arbitrage opportunity, making it easy for human traders to keep track.
Arbitrage is a great opportunity for trade but it does come with its own package of risks. This hurdle can be overcome by having proper knowledge and support from aided brokerages like GOODWILL, who not only share their expertise with you but also guides you with webinars and free online classes. They will be by your side from the moment you start your account till you get established in what you do. To begin your collaboration and start smart trading contact Goodwill at firstname.lastname@example.org or at +91 – 44 – 4020 5050.
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