| Market traders, especially high frequency traders take advantage of mispricings in the market, even if these inefficiencies last for just a few seconds or minutes. Mispricing can occur between two similar securities, like two S&P 500 ETFs, or within a single security, where the trading value differs from the net asset value (NAV).
Both types of inefficiencies can be exploited by market participants through arbitrage. Taking advantage of arbitrage opportunities usually involves buying an asset when it is underpriced or trading at a discount and selling an asset that is overpriced or at a premium...............................................Full Article: Source
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