Glossary · Defined term
Bid-ask spread
The bid-ask spread is the gap between the highest price buyers will pay and the lowest price sellers will accept.
Last updated Oct 2, 2026
What it means
The bid-ask spread is the gap between the highest price a buyer is willing to pay (the bid) and the lowest price a seller will accept (the ask) for a security at a given moment. It is effectively the cost of trading immediately: a buyer pays the ask while a seller receives the bid. Narrow spreads usually signal a liquid stock with many competing buyers and sellers, while wide spreads suggest thin trading where even small orders can move the price. Market makers earn much of their profit by capturing this spread. For investors, a wide spread is a hidden cost that eats into returns on every round trip.
An example
For illustration, a stock shows a bid of $50.00 and an ask of $50.10, so the spread is 10 cents. An investor who buys and immediately sells loses that 10 cents per share to the spread, before any commission. On a heavily traded stock the spread might be a single cent; on a thinly traded one it can be dollars.