What is Arbitrage? Find out here

Arbitrage represents the raison d’être of commodity trading. Traders try to generate profits by exploiting price differentials, be in geographical, product, or temporal form.

Geographical arbitrage

Geographical arbitrage represents a situation when one product can be sourced cheaper from a different location even when taking into account transportation costs.

Product arbitrage

Product arbitrage represents a situation where the trader optimizes or substitutes the product sold for a more economical (yet contract-and-purpose compliant) solution.

Time arbitrage

Time arbitrage represents a situation where a trader profits from a commodity that has different pricing at different delivery times (immediate vs deferred delivery), taking into account storage and financing costs.

David Goldstein

David is the Head Editor at Commodity Trading Guru. He has trading experience at large commodity trading houses globally. Currently he lives with his family and two dogs in a village near Geneva and enjoys triathlons and snow sports. Ask him about fine wine and modern art.