What is the bid–ask spread?

The bid–ask spread is the difference between the lowest sell offer and the highest buy offer in an order book. A narrow gap means those best quotes are close together; it does not establish that a large order can fully execute at those prices.

An instant-buy provider may also call its price adjustment relative to a reference market a spread. That quoted adjustment and the order book’s bid–ask gap are not the same measurement. Check which meaning a pricing disclosure uses.

Example

Suppose the best bid is $99 and the best ask is $101. The absolute gap is $2 and the midpoint is $100. Relative to the midpoint, the spread is 2 / 100 × 100 = 2%. Another denominator produces a different percentage, so comparisons should state their formula.

Slippage is the difference between an expected execution price and the actual fill price; it is not another name for spread. When calculating cost from the executed price, adding the spread already embedded in that price can double-count the same effect.

Our comparison of exchange fees and total costs shows how different execution prices change the assets received from the same budget.