Bid-Ask Spread

The bid-ask spread is one of the most important concepts for traders to understand, as it directly impacts trading costs and overall profitability. This comprehensive guide covers everything you need to know about bid-ask spreads, including what they are, how they work, and strategies to minimize their impact.

What Is the Bid-Ask Spread?

The bid-ask spread refers to the difference between the highest price a buyer is willing to pay (the bid) and the lowest price a seller is willing to accept (the ask) for a particular asset.

For example:

• Bid price for XYZ stock: $49

• Ask price for XYZ stock: $50