Bid-Ask Spread
The gap between the highest price a buyer will pay (bid) and the lowest price a seller will accept (ask). Crossing it is the minimum cost of an immediate trade.
The bid-ask spread is the difference between the best bid (highest buy order in the book) and the best ask (lowest sell order). A market buy fills at the ask; a market sell fills at the bid — so a round trip immediately costs the spread.
Spread width reflects liquidity: heavily traded large-caps may trade at $0.01 wide; illiquid small-caps or off-hours sessions can show spreads of 1–5%. The spread is a guaranteed cost paid to market makers for providing instant liquidity.
Limit orders that rest at or inside the current spread improve the market and earn maker status; market orders that cross the spread are takers.
On the desk
Best bid: $49.98, best ask: $50.02. Spread = $0.04. Buying at market costs $50.02; selling at market yields $49.98 — a $0.04 round-trip cost per share before commissions.