Bid-Ask Spread
The gap between the highest price buyers offer and the lowest price sellers accept.
The bid is what buyers will pay; the ask is what sellers want. The spread between them is a hidden cost you pay every time you trade. Tight spreads (a penny or two) are a sign of a liquid, healthy market. Wide spreads quietly tax every entry and exit.
For example
A stock with a $19.99 bid and $20.01 ask has a 2-cent spread. An illiquid option with a $0.40 bid and $0.80 ask forces you to give up a lot just to trade it.
Related terms
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