Arbitrage is practice of taking advantage of a state of imbalance between two (or possibly more) markets. Combinations of matching deals are struck to exploit imbalance, profit being difference between market prices.

So what does this mean in simple English? If you can find a situation where you can pay a smaller amount for a resource from one market and then turn around and sell that identical resource to another market for a larger guaranteed price then you are taking advantage of imbalance between two markets and realize a no risk profit.

Sound pretty cool right?

I mean, wouldn’t it be great to start a business where all you had to due was buy from one market and then sell to another at a higher price and make a guaranteed profit? What if you found a product that you could buy for $20 dollars and then you could turn around and sell it for $25 anytime you want? That’s life if you asked me!

But, I have to be blunt with you here, if it was that easy everyone would be doing it. In real world, to make a risk free profit from an arbitrage you have to be able to spot an opportunity before next guy does.

So, what I want to do is give you some things to look for to spot arbitrage situations so that you can take advantage of them in future. Knowing what to look for is half battle, so here what you need to keep an eye out for …

The Conditions for Arbitrage: (arbitrage is possible when any one of these two conditions is not met)

•The same asset sells for same price in different markets. (So, if you find and assets that sells for different prices in different markets then you have uncovered an arbitrage situation to that you may profit from.)

•Two assets with same cash flow must sell at same price in different markets ( So, if you can find a cash flow to purchase at a discounted rate you can again profit risk free from this imbalance)

Now these are pretty simple concepts to understand, but uncovering them in real world and even in your own home business situation can be a little bit trickier to accomplish. I want to take you through a few real world examples to help you get comfortable with application of concepts listed above. ( I want to try to help you to think outside of box so as you read examples ask yourself why they qualify as arbitrage according two rules listed.)

Example #1:

Everybody wants to make life easier, better. That’s true. People usually are looking for ways suit themselves. For most regular people, business is first choice to consider about. But what kind of business it is? The answer is: Internet.

But, what is idea of internet business? Selling your goods through internet, make more customers, more profit, see, exactly same idea like those businesses in real world. The difference is that, you are using internet to develop your business, not standing there waiting for customer to come.