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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