Orders and trading

Spread

The gap between the bid (the highest price a buyer will pay) and the ask (the lowest price a seller will accept).

Why does it matter?

It is a hidden cost of trading: buying and then selling right away loses about the spread.

How do I read it?

Large, heavily traded companies usually have a spread of a cent or two. Shares that trade little can have much wider spreads.

Example

With a bid of $99.98 and an ask of $100.00, the spread is 2 cents. Buying 100 shares and selling them right away would lose about $2, before any fees.