Bid-Ask Spread

Search Dictionary

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.

Do you have a trading or investing definition for our dictionary? Click the Create Definition link to add your own definition. You will earn 150 bonus reputation points for each definition that is accepted.

Is this definition wrong? Let us know by posting to the forum and we will correct it.