InsiderFlow › Glossary › What is the bid-ask spread?

What is the bid-ask spread?

The bid-ask spread is the gap between a security's best buying and selling price: the invisible cost of every trade.

At any moment there's a "bid" (what buyers offer) and an "ask" (what sellers demand). If you buy instantly you pay the ask; if you sell you receive the bid: the difference goes to intermediaries and market makers.

On liquid stocks the spread is a few cents; on small caps and exotic instruments it can exceed 1–2%: buying and immediately reselling would lose you that percentage.

Concrete example

A stock with a 99.95 bid and 100.05 ask has a 0.1% spread: on $10,000 that's $10 lost on a round trip, before commissions.

How you see it in InsiderFlow

On InsiderFlow these concepts come alive on real data: what big funds and insiders are buying, explained every day.

Frequently asked questions

Why do spreads widen?

With low liquidity or high volatility: in panic moments even liquid stocks show unusually wide spreads.

How do you reduce spread costs?

By using limit orders and trading liquid instruments during main market hours.