Bid-ask spread
The gap between the best available bid and ask prices.
Plain languagePractical exampleConnected reading
01
What is it?
The gap between the best available bid and ask prices.
02
Why does it matter?
A wider spread raises the hidden cost of entering and exiting a position.
03
How should it be read?
Compare it as a percentage of price and note the session and liquidity conditions.
04
Common mistake
Treating the last traded price as the price available to every investor.
A simple example
A 100.00 bid and 100.20 ask imply a 0.20, or roughly 0.20%, spread.