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Bid, ask and spread

In one line: The bid is what buyers offer, the ask is what sellers want. The gap between them is the spread.

Every market has two prices at once. The bid is the best price a buyer will pay right now. The ask is the best price a seller will accept.

The SECThe US stock market regulator. explains it like this. A market orderBuy or sell now at the best available price. to sell generally fills at or near the bid. A market order to buy fills at or near the ask. So if you buy and sell straight away, you lose the spread. It is a cost, like the fee the exchange booth takes when you swap holiday money.

Busy markets usually have small spreads. Quiet markets, or busy markets at a scary moment, can have wide ones. See Liquidity and Slippage.

Related

Sources & studies

  1. Investor.gov (SEC): Bid-ask spread
  2. Investor.gov (SEC): Types of orders
  3. Investopedia (secondary): Bid-ask spread

Trading termsLiquiditySlippage

Last checked: 2026-11-04 · Educational, not financial advice.

Education only, not financial advice. No signals. Backtests are hypothetical: real trading can be worse. Past results don't predict future results.