If the explanation is more nominalized, you can say:

Arbitrage is a trading behavior that uses the unreasonable price difference between contracts in different commodities, different markets and different months to obtain profits. Like hedging and speculative trading, it is three common futures trading methods.

If the explanation is popular, it can be understood as doing something.

Arbitrage trading is to make use of the temporary unreasonable price difference between different commodities, different markets and different months to make profits.

Here is a common example in life, which you may understand more easily:

For example, Xiaoming now owns a house in the suburbs, and the current market price is 800,000. Xiao Ming thinks that house prices will rise in the coming year. He also thinks that with the shortage of land supply in the city center, house prices in the city center will rise faster than those in the suburbs. Therefore, Xiao Ming has carried out the following business operations. He sold his house in the suburbs and got a price of 800 thousand yuan. At the same time, he used this 800 thousand to buy a house in the city center.

A year later, house prices really went up. The house price in the city center rose from 800,000 to 6.5438+0.2 million, and the house price in the suburbs rose from 800,000 to 6.5438+0 million. Xiaoming sold the house in the urban area at a price of 6.5438+0.2 million yuan, and bought back the house in the suburbs at a price of 6.5438+0.0 million yuan. Regardless of taxes and fees, compared with a year ago, Xiaoming still owns a house in the suburbs, but he got an extra cash income of 200,000 yuan.

Arbitrage risk

As for the risk you asked, there is theoretically the possibility of risk arbitrage, but in fact this kind of opportunity is rare. The more mature and perfect the market is, the less opportunities there are for risk-free arbitrage. You can understand it here, so the fact now is that if you make money first, there will be no 100% risk-free investment!

Also, this risk depends on the amount of money you invest! For ordinary people, 500,000 yuan is generally used as the boundary, and 500,000 yuan is arbitrage with 300,000 yuan margin, especially the inter-period arbitrage to collect unilateral margin, which can also bring considerable benefits.

Therefore, if you have enough money to live against risks and spare money, you can try arbitrage as a money-making model. Because you don't need complicated knowledge of mathematical statistics and profound knowledge of financial theory, you only need to know some basic knowledge of statistics and common sense of financial theory to carry out arbitrage trading. All seemingly complicated arbitrage techniques are paper tigers. The more complicated it is, the more it deviates from the essence. As for arbitrage, traders only need to know some common sense. (Only for traders with low investment)

Of course, if you are a big player, professional analysis team and data support are essential, which is difficult for ordinary investors to control.