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Arbitrage Profit Calculator

Calculate arbitrage profit from price differences between markets, assets, or instruments to identify trading opportunities.

Arbitrage Profit Calculator

Calculate arbitrage profit from price differences between markets, assets, or instruments to identify trading opportunities.

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Guide

Identifying and calculating arbitrage opportunities

  • Arbitrage is the simultaneous purchase and sale of the same or similar asset in different markets to profit from price differences, with minimal risk.
  • Arbitrage Profit = (Sell Price - Buy Price) × Quantity - Total Costs. Costs include transaction costs, holding costs, financing costs, and any other expenses.
  • Arbitrage opportunities exist when price differences exceed total costs. Efficient markets quickly eliminate arbitrage opportunities through price convergence.
  • Types of arbitrage include spatial (different locations), temporal (different times), statistical (related assets), and triangular (three-way exchanges).
  • Risks include execution risk (prices change before execution), counterparty risk, liquidity risk, and regulatory risk. True arbitrage should be risk-free.

Frequently Asked Questions

Arbitrage, price differences, and risk-free trading opportunities

What is arbitrage?

Arbitrage is the simultaneous purchase and sale of the same or similar asset in different markets to profit from price differences, with minimal or no risk. It exploits market inefficiencies.

How is arbitrage profit calculated?

Arbitrage Profit = (Sell Price - Buy Price) × Quantity - Total Costs. Costs include transaction costs, holding costs, financing costs, and any other expenses.

Is arbitrage risk-free?

True arbitrage should be risk-free, but in practice, risks include execution risk (prices change before execution), counterparty risk, liquidity risk, and regulatory risk. Pure arbitrage is rare.

What are the types of arbitrage?

Types include spatial arbitrage (different locations), temporal arbitrage (different times), statistical arbitrage (related assets), triangular arbitrage (three-way exchanges), and merger arbitrage.

Why do arbitrage opportunities exist?

Arbitrage opportunities exist due to market inefficiencies, information asymmetry, transaction costs, liquidity differences, or temporary supply/demand imbalances. Efficient markets quickly eliminate opportunities.

How quickly do arbitrage opportunities disappear?

In efficient markets, arbitrage opportunities disappear quickly (seconds to minutes) as traders exploit them, causing prices to converge. Less liquid markets may have longer-lasting opportunities.

What costs should I include in arbitrage calculations?

Include transaction costs (commissions, spreads), holding costs (storage, insurance), financing costs (interest), currency conversion costs, and any other expenses that reduce profit.

Can I arbitrage between different assets?

Yes, but this is statistical arbitrage (not pure arbitrage) and involves risk. Examples include pairs trading, index arbitrage, and convertible arbitrage. Risk is higher than pure arbitrage.

What is triangular arbitrage?

Triangular arbitrage exploits price differences between three currencies or assets. For example, if A/B, B/C, and C/A exchange rates don't align, profit can be made by trading through all three pairs.

How do I find arbitrage opportunities?

Monitor price differences across markets, use automated systems to detect opportunities, focus on less liquid markets, and consider transaction costs. Real-time data and fast execution are essential.

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Arbitrage Profit Calculator

Calculate arbitrage profit from price differences between markets, assets, or instruments to identify trading opportunities.

How to use Arbitrage Profit Calculator

Step-by-step guide to using the Arbitrage Profit Calculator:

  1. Enter your values. Input the required values in the calculator form
  2. Calculate. The calculator will automatically compute and display your results
  3. Review results. Review the calculated results and any additional information provided

Frequently asked questions

How do I use the Arbitrage Profit Calculator?

Simply enter your values in the input fields and the calculator will automatically compute the results. The Arbitrage Profit Calculator is designed to be user-friendly and provide instant calculations.

Is the Arbitrage Profit Calculator free to use?

Yes, the Arbitrage Profit Calculator is completely free to use. No registration or payment is required.

Can I use this calculator on mobile devices?

Yes, the Arbitrage Profit Calculator is fully responsive and works perfectly on mobile phones, tablets, and desktop computers.

Are the results from Arbitrage Profit Calculator accurate?

Yes, our calculators use standard formulas and are regularly tested for accuracy. However, results should be used for informational purposes and not as a substitute for professional advice.