Definition and example
Bid identifies the buying price and ask the selling price in a quote. Their difference is the spread. Synthetic example: a bid of 100 and ask of 100.50 produce a spread of 0.50 price units.
This describes a quote at one moment and for its available quantity; it does not guarantee a future fill. The last traded price need not match bid or ask. When reviewing costs, check whether simulated fills already incorporate the spread to avoid counting it twice.
Sources and references
Chezur examples and explanations are educational. Consult the original source to verify conditions, data and updates.
Context and review of this explanation
What does the bid–ask spread measure?
- Topics
- Orders and execution · Units and costs
- Level
- Beginner
- Skills
- Explain an order instruction · Calculate with units and costs
- Examples
- Hypothetical situations illustrating the concept.
- Specialist review
- Not documented for this edition. Automated structure and internal-link checks do not establish specialist review.