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 is common in various markets, including stocks, currencies, and commodities. Traders often use sophisticated software to identify these price discrepancies quickly, allowing them to execute trades almost instantly before the prices adjust and eliminate the opportunity.