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I'm not sure I agree with the description of arbitrage as "riskless". The arbitrageur is accepting the risk that the arbitrage opportunity will go away in betwe
by quanticle 15y ago
I'm not sure I agree with the description of arbitrage as "riskless". The arbitrageur is accepting the risk that the arbitrage opportunity will go away in between the buy and the sell. This is true whether you're arbitraging salt via caravans across the Sahara or arbitraging currencies in millisecond trades.
- philwelch 15y agoIt's the idea of simultaneous transactions that makes it riskless. Whether millisecond forex trades can be modeled as "simultaneous" is another question.
- fanboy123 15y agoYep. Also have counterparty risk. Just because you have a contract for a purchase and a sale doesn't guarantee that the transactions will go smoothly.