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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