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Arbitrage Trading Program
A trading strategy taking a long or short position on a stock or commodity and taking the opposite position on a futures contract. This strategy often makes use of a computer program because the transactions involved can become complex and occur in rapid succession. A trader using an arbitrage trading program usually closes the positions toward the end of the futures contract when the prices of the contract and the underlying are approximately equal. This strategy is often used in trading whole baskets of stocks.
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