Bid-Ask Spread
trading
The difference between the highest bid and lowest ask price for an asset.
- Also known as
- Spread
The quoted bid-ask spread is the best ask minus the best bid at a particular venue and moment. Crossing it contributes to immediate execution cost. A tight spread can signal competition among orders, but it does not prove that enough depth exists for a large trade.
Effective spread and realized execution also depend on order size, depth, hidden liquidity, fees, latency, and price movement. Comparing spreads requires the same pair, venue, time, and size.
Related terms
Liquidity
→How easily an asset can be bought or sold in size without causing a large price move.
finance · trading
Market Order
→An instruction to trade immediately against available orders, prioritizing execution over a guaranteed price.
trading · exchange
Limit Order
→An order to buy or sell an asset at a specified price or better, without guaranteeing execution.
trading
Order Book
→A real-time list of buy and sell orders organized by price level on an exchange.
trading
Market maker
→A market maker quotes buy and sell prices to provide liquidity, earning the spread and/or incentives.
markets · trading