Glossary entry
The bid-ask spread is the gap between the highest buying price and the lowest selling price available for an instrument. It reflects trading conditions including liquidity, uncertainty, and dealer costs. Crossing the spread creates an immediate execution cost relative to the midpoint, while larger orders can incur additional cost by reaching deeper price levels.
Illustrative example
With a bid of 10.00 and ask of 10.04, the spread is 0.04. Buying at the ask and immediately selling at the bid incurs that difference.
What to consider
Spreads can widen around news or outside busy sessions. Compare total execution costs, including commissions and slippage, before assessing trading expense.
General information, not a personal recommendation. Product availability, rights, and obligations are determined by the relevant provider, jurisdiction, and approved agreements.