The spread at a brokerage
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 4 min
In short
The spread is the gap between the price a brokerage sells at and the price it buys at. That gap is the real cost of the trade, even when the screen says fees are free. It varies by asset, by market conditions and by operator, so check both quotes before you trade.
Key points
- The buy/sell gap is the real cost
- A 'no fee' label does not mean no cost
- Spreads widen in turbulent markets
- Width varies by asset and operator
Definition
The difference between the purchase price and the sale price a brokerage quotes at the same moment. Users trade at the unfavourable side of that gap, and it is a source of revenue for the operator.
A brokerage screen shows the buy price and the sell price side by side. The buy price is always higher and the sell price always lower. That gap is the spread, and it is why a position looks slightly down the instant you open it.
Spreads are not fixed. They tend to widen when prices are moving hard and for assets with little trading, because holding inventory is riskier for the operator when the direction is unclear.
Checking before you trade is easy: compare the two quotes on the same screen and see how large the gap is relative to the price. If the same asset is also available on an order book, comparing with the book makes the difference concrete.
Watch out for
- · Buying and selling straight away costs you the spread for certain
- · Spreads can be much wider than usual during sharp moves
- · Levels vary by operator and asset — check before trading