What Is Spread? Meaning & Example
Definition
The spread is the difference between the highest price a buyer will pay (the bid) and the lowest price a seller will accept (the ask). Narrow spreads usually mean lower trading costs.
Related terms
Liquidity describes how easily an asset can be bought or sold quickly without greatly moving its price. Highly liquid markets have many buyers and sellers and tight spreads.
Market OrderA market order buys or sells immediately at the best available price. It prioritizes speed over price, so the final price may differ slightly from the last quote.
PipA pip is a standard unit of price movement in forex, usually the fourth decimal place for most pairs and the second for yen pairs. Pips are used to measure gains, losses and spreads.
What is Spread?
The spread is the difference between the highest price a buyer will pay (the bid) and the lowest price a seller will accept (the ask). Narrow spreads usually mean lower trading costs.
Can you give an example of Spread?
If a stock's bid is $10.00 and ask is $10.02, the spread is 2 cents.