Bid–ask spread
The difference between the best available buying price and selling price.
Definition
The difference between the best available buying price and selling price.
Why this concept matters
It is an implicit transaction cost, especially for thinly traded assets.
How it works
A buyer accepts the asking price and a seller accepts the bidding price. The gap between them is a potential immediate cost.
Calculation guide : Spread = best asking price − best bidding price
What to watch
The spread may widen when a market is volatile or illiquid.
Simple example
Buying at £100.10 and immediately selling at £99.90 represents a £0.20 spread.
Example currency : United Kingdom (GBP). The reference country controls the example currency.
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