Arbitrage is a practice in economics and finance where an individual takes advantage of a difference in prices in two or more markets by striking a combination of matching deals to capitalize on the difference, with the profit being the difference between the market prices at which the unit is traded. The practice involves buying and selling the same or similar asset in different markets simultaneously to profit from tiny differences in the assets listed price. The transactions must occur simultaneously to avoid exposure to market risk, or the risk that prices may change in one market before both. The term "arbitrage" is also sometimes used to describe other trading activities, such as merger arbitrage, which involves buying shares in companies prior to an announced or expected merger. There are different types of arbitrage, including pure arbitrage, retail arbitrage, and algorithmic trading. While arbitrage is considered a relatively low-risk exercise, price discrepancies across markets are generally minute in size, so arbitrage strategies are practical only for investors with substantial assets to invest in a single trade.