Bid-Ask Spread

Difference between bid and ask price.

For example, if a stock’s current bid price is 52.36 and current ask price 52.39, the bid-ask spread is $0.03.

The size of bid-ask spread is inversely related to liquidity (more popular and heavily traded stocks tend to have narrower bid-ask spreads).

The size of bid-ask spread is very important for transaction costs in the form of slippage.

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