Plain-English definitions, reviewed by an independent investor
Bid and Ask
The bid is the highest price buyers will pay; the ask is the lowest sellers will take. The gap is the spread.
The bid is the highest price buyers will pay; the ask is the lowest sellers will take. The gap is the spread.
Spread = Ask − Bid
Why it matters
It is the real cost of an instant trade, paid quietly on every buy and sell.
Common confusion
A wide spread can cost more than a commission, especially in illiquid names.
Frequently Asked Questions
Why is the spread a cost?
You buy at the ask and sell at the bid, losing the difference immediately.
Tight vs wide spread?
Tight means liquid and cheap to trade; wide means the opposite.