What is a spread in trading? The bid-ask spread explained
A spread in trading is the difference between the price you can buy an asset at and the price you can sell it at. It is a cost you pay on every trade, even when a platform advertises zero fees, because you buy at the higher price and sell at the lower one.
The most common type is the bid-ask spread. In sports betting, “spread” means something else entirely (a point spread is a handicap on the score), but on brokers and crypto exchanges it always refers to this price gap.
What is a spread in trading?
The spread is the difference between two prices that are quoted for the same asset at the same moment:
- The bid: the highest price a buyer is currently willing to pay.
- The ask (or offer): the lowest price a seller is currently willing to accept.
The ask is always higher than the bid. If you buy at the ask and immediately sell at the bid, you lose the spread. The market price you see on a chart is usually the midpoint between the two prices, so the real price you pay is a little higher, and the real price you get when selling is a little lower. The spread itself isn’t fixed: it can fluctuate based on supply and demand and market conditions from one second to the next.
How the bid-ask spread works
The bid-ask spread works through the order book, where buyers and sellers post their orders. The best bid and the best ask sit closest together; the gap between them is the spread.
Say a share has a bid of €99.90 and an ask of €100.10. The spread is €0.20, or 0.2% of the ask price. If you put €1,000 into it with a market order, you buy 9.99 shares at €100.10. If you sold straight away at €99.90, you would get €998.00 back. The €2.00 difference is the spread cost, on top of any order fee. That looks small, but you pay it again on every trade, so frequent trading in a wide-spread asset adds up quickly.
If you open a long position (you buy), you start slightly negative, because selling straight away would only get you the bid. A short position works the other way round. Either way, the asset’s price has to move by more than the spread before you make a profit.
To calculate the spread as a percentage: subtract the bid from the ask, divide by the ask and multiply by 100. That figure makes it easy to compare spreads across assets with different prices.
The role of market makers
Market makers are firms that keep quoting both a bid and an ask, so there is always someone to trade with. They earn the spread in return for the risk of holding the asset, and their quotes reflect the current market price plus a margin for that risk. On stock exchanges and on many crypto exchanges, market makers are what keeps spreads narrow on popular assets. When they step back, during a crash for example, spreads widen fast.
What makes a spread wide or narrow
Spreads tend to be narrow when there are many buyers and sellers, and wide when there are few. The main factors are:
- Liquidity. Higher liquidity and higher trading volume mean more orders close to the market price and a narrow spread. Lower liquidity, as in small company shares or new tokens, means a wide one.
- Volatility. In periods of high volatility, market makers widen their prices to protect themselves, so market volatility and spreads rise together.
- Market hours. Stocks and ETFs often have wider spreads just after the open, before the close and outside the main trading session. Crypto trades all day, but liquidity can be thinner at night and at weekends.
- The platform. The same asset can carry a very different spread depending on where and how you trade it.
Spreads on brokers and crypto apps
On many apps the spread is not just the market gap but part of the platform’s price. That is the main way “zero-fee” or low-fee products earn money, so it pays to know how the spread applied to your order is set.
| Where you trade | How the spread works |
|---|---|
| Exchange order book | You see the live bid and ask; the spread is set by other traders |
| Broker or app with a quoted price | The platform quotes its own buy and sell price, with a margin built in |
| CFD or forex broker | The spread is often the broker’s main charge, quoted in points or pips |
Two examples from our provider research, checked on 23 October 2026:
- Bitpanda builds a premium into the price of its crypto buys instead of charging a separate fee: 0.99% for Bitcoin and stablecoins and 1.49% for most other crypto. On a €500 Bitcoin buy, that is €4.95 included in the price. See our Bitpanda review.
- Trade Republic has offered “Best Price” orders at €1, executed against Trade Republic itself, since July 2026. It does not publish the spread on those orders. See our Trade Republic review.
Several crypto exchanges also say that a subscription removes their app trading fee, while the spread still applies. A “free” trade is rarely free.
Spread in crypto vs stocks and forex
The spread in crypto is usually wider and more variable than in large stocks or major currencies. A major currency pair or a large company share trades in such volume that the spread is tiny. Crypto ranges from Bitcoin, with deep order books on large exchanges, to thousands of small tokens where the spread alone can be several percent.
In forex and CFD trading, the spread is often the main cost, and leverage multiplies it. Most retail traders lose money with CFDs, and paying a spread on every leveraged position is part of the reason. If a broker quotes a spread “from” a low figure, the spread you get during volatile periods can be much wider.
Spreads on decentralized exchanges work differently: there is no order book, and the price comes from a liquidity pool, so the cost shows up as price impact and a pool fee instead.
Spread also differs from slippage. The spread is the gap you can see before you trade. Slippage is the extra price movement while your order fills, especially in thin markets.
Other meanings of spread in finance
“Spread” is used for a few other price gaps too, which is why search results can be confusing:
- Options spreads. An options strategy that involves buying one option and selling another on the same stock, at different strike prices or expiration dates. It caps both the possible profit and the possible loss.
- Yield spread. The difference in interest between two bonds, for example a company bond and a government bond. A wider yield spread signals that investors see a higher risk.
- Point spread. In sports betting, the handicap on a team’s score that decides whether a wager is covered. It has nothing to do with trading costs.
On brokers and exchanges, the word almost always means the bid-ask spread explained on this page.
Why the spread matters to you, and the EU rules
The spread matters because it is often your largest trading cost, and the least visible one. If you invest €100 a month and pay a 1% spread on each buy, that is €1 a month, or €12 a year, before any fee. On a platform with a 0.1% spread the same plan costs about €1.20 a year.
In the EU, brokers that fall under MiFID II must show you their costs and charges before you trade, and the EU ban on payment for order flow applies from 30 June 2026. That has pushed some apps to change how they execute orders and earn money, so check the cost disclosure in the app for the spread or “price margin” component, not just the order fee.
How to pay less:
- Use limit orders on an exchange’s order book instead of instant buys in an app. You set the price, so you control the spread you pay, and it is often cheaper than an instant buy.
- Trade during busy hours for the asset, such as when its main stock exchange is open.
- Stick to liquid assets if cost matters: large ETFs, large company shares and major coins.
- Compare the total cost, fee plus spread, across platforms. Our guide to trading fees shows how.
The bottom line
The spread is the gap between the bid and the ask, and you pay it every time you trade. It is narrow on liquid assets in calm markets and wide on small assets, in volatile periods and inside some apps. Look past the order fee, check the quoted buy and sell prices, and use limit orders on an order book when you can.
Related terms
Questions people ask
Is a higher or lower spread better?
Lower is better for you as a trader. A narrow spread means you lose less when you buy and later sell, and it usually signals a liquid market with many buyers and sellers.
Do I buy at the bid or the ask?
With a market order you buy at the ask price and sell at the bid price. That is why you are slightly down the moment you open a position: the difference is the spread.
What is the spread on crypto?
It depends on the coin and the platform. On a busy order book for Bitcoin the spread is often a tiny fraction of a percent, while app buys and small tokens can carry spreads of 1% or more, sometimes on top of a fee.
What is a good bid-ask spread?
For large stocks, ETFs and major coins on liquid markets, a spread of a few hundredths of a percent is normal. If a quote shows more than about 1% on a mainstream asset, compare another platform or use a limit order.
How do market makers make money from the spread?
Market makers keep quoting a price to buy and a slightly higher price to sell. Each time they buy at the bid and sell at the ask, they earn the difference, in return for providing liquidity.