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Bid-Ask Spread

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Definition of 'Bid-Ask Spread'

The Bid-Ask Spread is also called the Bid-Offer Spread and is the amount by which the ask price exceeds the bid. This is the difference between the highest price that a buyer is willing to pay for a security and the lowest price at which a seller will sell that same security (be it a future, option, commodity or stock).

In highly liquid instruments, such as the E-mini S&P500 (ES), the bid-ask spread will be the size of a tick (minimum price movement) for that symbol. Outside of regular trading hours or for securities that are not highly traded the bid-ask spread might be wider than a tick.

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