The usual notion of arbitrage involves putting two market orders at different exchanges. These orders are immediately executed at different prices and I earn the price difference.
Is there a special name for the following activity?
- I put a limit order at exchange A, which is not immediately executed.
- When the order at A is executed, I immediately put a market order at exchange B and earn the price difference.
If price at B changes before order at A is executed, I cancel the limit order. So the activity is relatively risk-free (a few kinds of leg risk still apply).
Contingent orders are an automated way to execute the second order upon execution of the first one.
Is there a name for this way of earning money? It is very similar to arbitrage, but the first order is not market but a limit order.