Arbitrage is a financial strategy that involves buying and selling the same asset in different markets to take advantage of price differences. For example, if a stock is priced lower on one exchange than another, an investor can buy it at the lower price and sell it at the higher price, making a profit without any risk. This practice helps ensure that prices remain consistent across markets. Traders often use technology and algorithms to identify arbitrage opportunities quickly. While it may seem simple, successful arbitrage requires careful analysis and timing, as price discrepancies can disappear in seconds.