The spread is the difference between the best ask and the best bid. It's a hidden cost: if you buy and sell straight away, you lose roughly the spread.
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Spread: The spread is the difference between the best ask and the best bid. It's a hidden cost: if you buy and sell straight away, you lose roughly the spread.
What it means
The spread is the difference between the best ask and the best bid. It's a hidden cost: if you buy and sell straight away, you lose roughly the spread.
Example
With a bid of 48¢ and an ask of 51¢, the spread is 3¢. On a 50¢ contract that's about 6% of your stake gone if you flip in and out.
Practical tip
Tight spreads usually mean an active, liquid market. Wide spreads are a sign to use limit orders and to be patient.
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