Investing Basics

What Is the Bid-Ask Spread?

The bid-ask spread is the difference between the highest price a buyer is willing to pay for a security (the bid) and the lowest price a seller is willing to accept (the ask). It is an indirect trading cost: buying at the ask and immediately selling at the bid would lose the spread.

Example

If the bid is 49.95 and the ask is 50.00, the spread is 0.05, or about 0.1% of the price.

What Affects It

Heavily traded securities usually have narrow spreads; thinly traded ones and volatile markets tend to have wider spreads.

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Last updated: September 29, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.