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Commodity futures spread arbitrage can only be understood by the younger brother who gives an example to illustrate the image point.
Arbitrage refers to the trading behavior of taking advantage of the price difference between related markets or related contracts to trade in the opposite direction in the related markets or related contracts, so as to obtain profits from the favorable changes in futures prices.

If the spread between the futures market and the spot market is used for arbitrage, it is called arbitrage. If the spread between different contracts in the futures market is used for arbitrage, it is called spread.

Extended materials are traded by using the price difference between two different but related commodities. These two commodities can replace each other or be restricted by the same supply and demand factors. The form of cross-commodity arbitrage is to buy and sell commodity futures contracts with the same delivery month but different varieties at the same time. For example, arbitrage transactions can be carried out among metals, agricultural products, metals and energy.

The reason why traders carry out arbitrage trading is mainly because the risk of arbitrage is low. Arbitrage trading can provide some protection to avoid unexpected losses or losses caused by sharp price fluctuations, but the profitability of arbitrage is also smaller than that of direct trading.

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