Important Strategic Considerations

Lapse of Judgement

It happens. You misjudge an arbitrage opportunity you're stuck holding the correctly priced asset, or worse, an asset incorrectly in the wrong direction. It can happen. It will happen. You learn from your mistakes and adjust your models going forward. That's why you always diversify plays.  


  • Research.

  • Don't not do your research.

  • Continuously monitor your play for changes.

Lack of Diversification

Self-inflicted losses are the worst losses. Expect to misjudge a situation a percentage of the time. If you bake that into your calculations, you should be playing 5-15 arbitrage opportunities and hopefully have 80%+ playing out as expected.


  • Diversify.

  • Don't not diversify.

  • Continuously monitor your portfolio for risk.

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Income Disclaimer: Examples of successful trading and/or investing strategies are often highlighting the top players, strategies, firms and companies in the industry and results are not typical. actual results may vary greatly and actual returns may be far less than the hypothetical highest potential returns discussed. Your own skill, initiative, and research are major factors in the outcome of your investments as well as market conditions, general underlying asset prices, market forces and other influences outside the control of arbitrage today, its writers, contributors, employees, management and shareholders.

¹Cumulative total arbitrage worldwide by arbitrageurs who have made their revenues and trade volumes publicly available.

²Low risk as defined by low beta scores. Because arbitrage returns are generally, as a whole, uncorrelated with the market and rely purely on the spread between buyers and sellers in different markets, the "Beta" is generally lower, often associated with lower risk investments. low risk does not mean zero risk. in this context, risk is relative and quantitative. quantitative measures of risks are not guaranteed to be accurate predictors of future performance.

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