What is the bid-ask spread?
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 3 min
In short
The spread is the gap between the price at which you can buy right now and the price at which you can sell right now. Because the gap exists, buying and immediately selling always costs you that difference. A venue advertising zero fees may still be charging you through the spread.
Key points
- The gap between the best bid and the best ask
- Buying then selling immediately costs that gap
- Zero-fee venues can still charge through it
- It widens in quiet hours and thin markets
Definition
The difference between the highest resting buy price (bid) and the lowest resting sell price (ask), which forms part of the real cost of trading.
If the bid is 4,990,000 yen and the ask is 5,010,000, the spread is 20,000. Buy at market and you pay 5,010,000; sell immediately at market and you receive 4,990,000. The round trip costs exactly that 20,000 — the spread itself.
How wide the spread runs tracks liquidity. Busy assets and busy hours show tight spreads; thin assets, overnight sessions and volatile moments show wide ones. The same coin can quote differently across exchanges, so any comparison has to include the spread.
Be especially careful with dealer-style windows advertising zero commission. The operator's revenue is the gap between its buy and sell quotes, so a real cost exists even with no line item named 'fee'. A headline rate alone cannot tell you which venue is cheaper.
Watch out for
- · Spreads can widen sharply during volatility or when liquidity thins out
- · A 'no fee' label does not mean no cost — it may be inside the quote
- · The smaller and more frequent the trades, the heavier the spread weighs