Did you ever know that NSE BSE Arbitrage contributes to the major volume of trading in India? And this is true for other exchanges too in different countries. Well, arbitrage is so far considered as the safest trading strategy and it is 100% legal in India. You need not apply tons of indicators or chart patterns to spot an arbitrage opportunity, you simply need to look at the price of the security in NSE and BSE and execute your trades. We have tried to make this process even more simpler by creating an excel sheet which signals NSE BSE Arbitrage opportunity. Read further to understand what is arbitrage and how to execute NSE BSE Arbitrage trades.

Arbitrage is a trading strategy where one takes advantage of the difference in price of a particular security on different exchanges it is traded in. Since NSE and BSE are the two major stock exchanges of India, we would consider the price difference between these two exchanges. The basic assumption behind this strategy is the fact that price tends to converge to an identical value at the end of trading day, even when there is a significant difference in price during market hours.

Let’s take an example: suppose a particular stock “X” is trading at 100 INR at NSE and 98 INR at BSE during a particular time at market hours. The 2 Rupees difference in the price signals an arbitrage opportunity. You can simply buy at 98 INR on BSE and simultaneously sell at 100 INR on NSE. Towards the end of the day, the prices would tend to equate and you would make a profit on your trades.

Suppose price at NSE is 101 and price at BSE is 100.5 later in the day. You can put a sell order on BSE making 2.5 (100.5-98) rupees profit, and you can put a buy order on NSE making 1 (100-101) rupee loss. You will end up making a net profit of 1.5 rupees in the process. Not bad, if you are trading huge quantity. And moreover, this is practically risk-free, as the loss on one order would be balanced by profit on the other order.

See the below stock (from Moneycontrol) which has huge Arbitrage opprtunity (price difference of 76 INR)

Pair Trading Excel Sheet: with Backtesting

Step 1: Refresh this page during market hours to see the stocks which have Arbitrage opportunity.
Step 2: Place order based on the “Signal” column.
Step 3: Select the stocks which you are familiar with and which you already have in your DP. The ones listed in Sensex, Nifty or F&O are better choices over others.
Step 4: Towards the end of market hours close all your open positions.

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