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Investing & the Stock Market vocabulary · Orders & Trading

Bid-ask spread

Meaning in investing & the stock market, with examples

/ˌbɪd ˈæsk spred/nounCore term

In investing & the stock market, bid-ask spread means: The difference between the highest price a buyer is offering (the bid) and the lowest price a seller will accept (the ask) for a security at a given moment.

In Turkish: alış-satış farkı, makas, kotasyon farkı

How it is used

Traders check the bid-ask spread to judge liquidity and trading cost. Spreads widen when markets are nervous or a stock is rarely traded, and narrow or tighten when trading is active. British texts often say 'offer' instead of 'ask'.

Example sentences

  1. The bid-ask spread on this small company is almost two percent, which makes trading expensive.

  2. Spreads widened sharply in the first minutes of trading, so the bid and ask were far apart.

Common collocations

  • narrow bid-ask spread
  • wide spread
  • spread widened
  • tight spread
  • liquidityHow easily an asset can be bought or sold quickly without a big change in its price. A liquid market has many buyers and sellers.
  • market orderAn instruction to buy or sell a security immediately at the best price currently available, without setting a price limit.
  • limit orderAn instruction to buy at or below a chosen price, or to sell at or above a chosen price. The order is only executed if the market reaches that price.
  • trading volumeThe number of shares or contracts traded, or their total value, during a given period such as one day.

More terms: Orders & Trading

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This page explains English vocabulary for learners. It is not financial advice.