Spread
InvestingGlossary term
Definition
The difference between the bid price (what buyers will pay) and ask price (what sellers want). Narrower spreads indicate higher liquidity and lower transaction costs.
Related terms
- Bid PriceThe highest price a buyer is willing to pay for a security. The difference between the bid and ask price represents the spread, which is a transaction cost.
- Ask PriceThe lowest price a seller is willing to accept for a security. Also called the offer price. The difference between ask and bid price is called the spread.
- LiquidityHow easily an asset can be bought or sold without significantly affecting its price. Stocks with high trading volume are highly liquid; real estate is relatively illiquid.
Get advice that uses your real numbers
Warren reads your accounts and explains what terms like this mean for your plan. Free to start, no credit card required.