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Wednesday, 9 December 2015

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Different Types of Arbitrage techniques Available

There are many ways to trade in the Stock market. Different traders follow different techniques to trade in the Stock Market. But it is a experience of all that the Stock market trading is always accompanied with lot of risks. Thus it is important to follow the strategy with minimum risks. Out of the many strategies available the Arbitrage technique and the Spread Technique are the important one to trade with minimum risks. In the case of Arbitrage the buy and sell signals are placed simultaneously to minimize the risks occurring from price changes. The profit in the arbitrage trading occurs from the difference between the buy and sell price. Out of the two levels the buy call I executed for lower price levels and the Sell call is initiated from the higher price levels. Thus the profit incurred is based on the price level difference of the buy and sell levels.
The arbitrage in the Stock market is practiced by the two ways:
1)      Inter Exchange Arbitrage
2)      Spot Future Arbitrage
In the Inter Exchange Arbitrage the price difference between the prices of the Same Stock in two different exchanges is seen. The difference in the prices will account for the profit or the loss made. The higher price level is sold and the lower one is bought. One also needs to square up the trades when the difference between the prices reduces.
Another form of arbitrage is practiced with the buying a particular stock in the cash market and selling its future contract. The difference in the price levels of the current cash market and future market will account for the profit to be made at the time of expiry of future contract.

These all techniques are used by the technical analysts in the advisory firm like Money Classic Research to generate accurate Stock market tips.

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