What Is the Bid-Ask Spread?

The bid-ask spread is the difference between the highest available buying price and the lowest available selling price.

For example:

Bid = 100.00

Ask = 100.05

Spread = 0.05

A narrow spread generally indicates a smaller immediate transaction cost, while a wider spread can indicate thinner liquidity or increased uncertainty.

The spread is especially important for scalpers and high-frequency traders.

A good trading setup can still become expensive when execution costs are ignored.

Do you consider spread before entering a trade?