Am wondering if arbitrage theory (the ones defined "classically" with stochastic processes, martingales, etc.) is actually helpful in practice for an actual trader beyond simply having an explanation for market arbitrage.

The concepts seem simple enough that it seems difficult for me to conceive how it'd suggest anything beyond providing a starting point for identifying market arbitrages in the real-world (i.e. take triangular arbitrage for example but that market arb has basically reached its limits).

Am wondering if this community has a different view for arbitrage theory and if there may be other texts out there that may be more relevant for practitioners. Thanks!

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    $\begingroup$ Yes, it is very difficult to find an arbitrage, nevertheless people are always looking for such an opportunity. It becomes a mental attitude for looking at markets. That is how quants are trained. There are well known quants such as Ed Thorp, Fischer Black, John Meriwether who have made significant money from finding such opportunities before they were generally known (which causes the opportunity to disappear). Unfortunately I am not one of these people ;) $\endgroup$
    – nbbo2
    Commented Nov 24, 2023 at 9:42


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