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  1. Home
  2. /Glossary
  3. /Bid-Ask Spread
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trading

Bid-Ask Spread

The difference between the highest price a buyer will pay (bid) and the lowest price a seller will accept (ask).

Definition

The difference between the highest price a buyer will pay (bid) and the lowest price a seller will accept (ask). A tight spread means the market is liquid and efficient. Wide spreads indicate low liquidity and higher trading costs. Market makers profit by capturing the spread.

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Related Terms

Spread

The difference between the highest bid and lowest ask price for an asset.

Bid Price

The highest price a buyer is willing to pay for an asset right now.

Ask Price

The lowest price a seller is willing to accept for an asset.

Accumulation Phase

A period when smart money quietly buys up an asset before a major price move.

Annualized Return

The average yearly return on an investment, calculated to account for compounding.

Arbitrage

Profiting from price differences of the same asset across different markets.

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