Many stocks in Indian market are traded in NSE (National Stock Exchange) as well as BSE (Bombat Stock Exchange) and also you have the option of buying stock in one exchange and sell it in the other one. Now if we use Arbitrage we can make lots of money in a risk free way.
Now before going into the details of how to be doing such trading first I would like to explain what is Arbitrage. As a quote from Wikipedia
In economics and finance, arbitrage is the practice of taking advantage of a price differential between two or more markets: a combination of matching deals are struck that capitalize upon the imbalance, the profit being the difference between the market prices.
- The same asset does not trade at the same price on all the exchanges
- An asset with a known price in the future does not today trade at its future price.
Then we can take advantage of Arbitrage and sell at lower priced exchange and buy at the higher priced exchange and make some big bucks.
Now there are many things you should consider but I would mention some.
- Do not try to execute the transactions manually but it should be an automate process because the situation may not hold for longer time duration.
- Always have the stock in the delivery and then execute the sell before you buy.
- Remember to execute it when you have the cost of your broker covered.