What is a bid ask spread?

A bid-ask spread is the difference between the highest price that a buyer is willing to pay for an asset and the lowest price that a seller is willing to accept. The spread is the transaction cost. Price takers buy at the ask price and sell at the bid price, but the market maker buys at the bid price and sells at the ask price.

What is the difference between bid and ask price?

By definition, the ask price will always be higher than the bid one. The numerical difference between the bid and ask is called the bid-ask price spread. The bid-ask spread is simply the difference between the highest price being offered for an asset (bid) and the lowest price it is being sold for.

What is the bid-ask spread?

Tip: The bid-ask spread represents the gap between the highest bid price and the lowest ask price for a certain security, at a given time. When investors talk about the bid-ask spread, they are often referring to stocks, but the same terms are used when trading other securities like bonds and options.

What is a bid size & ask size?

The bid size and ask size represent the number of stock or other securities that traders are willing to buy or sell at a certain bid price or ask price. This is usually represented in lots of 100, meaning an ask size of 4 means 400 units are available for that price.