Command Palette

Search for a command to run...

Market basics

Bid-Ask Spread

The gap between the highest price a buyer will pay (bid) and the lowest price a seller will accept (ask).

FormulaAsk price − Bid price

At any moment, a stock has two live prices, not one: the bid, the highest price a buyer is currently willing to pay, and the ask (or "offer"), the lowest price a seller is currently willing to accept. The bid-ask spread is the gap between them. A market buy order fills at (or near) the ask; a market sell fills at (or near) the bid.

The spread is effectively a built-in cost of trading immediately rather than waiting: buy and sell in the same instant with market orders and you lose the spread even before any price movement. For a heavily traded stock the spread is typically a fraction of a percent and barely noticeable; for a thinly traded one it can be wide enough to matter, especially for a short-term trade.

Spread width is one of the clearest signals of a stock's liquidity — narrow, stable spreads generally mean many active buyers and sellers; wide or erratic spreads generally mean few.

Related terms