Market Terminology


The Alternative Investment Market, an official Stock Exchange market for investors seeking investment opportunities in smaller, and usually, higher risk entities. Not available as a CFD.


Basically this is the art of buying something cheap in one place and selling it at a profit somewhere else. The rise of global electronic trading has made this process much faster and easier, enabling arbitrageurs - as they're called - to switch huge sums of money across continents in seconds in an attempt to exploit small differences in the quoted prices of investments in different markets - foreign currency, for example.

In share trading, so-called risk arbitrageurs attempt to make profits from the usual share price movements of companies that are in takeover situations. These investors will simultaneously buy stock in the target company, whose share price normally rises, while selling that of the bidder, whose share price normally falls. They will also invest in the target company if they think there's a chance the bidder will have to raise the offer price.


The lowest price at which someone will sell an investment at a given moment. Arbitrage is the exploitation of markets moving at different rates. For example if 3 month £ cash rate moves but the spot, forward and $ cash rate does not then there may be an opportunity to make money by trading in the underlying markets.