Definition
The gap between the highest price a buyer will pay (the bid) and the lowest price a seller will accept (the ask).
The story
It's like a currency exchange booth at the airport: it buys dollars at one price and sells them at a slightly higher one. In busy markets the gap is tiny. When markets get nervous or thin, like overnight, it widens.
Why markets watch it
Wide spreads are a sign of stress or low trading.
Connects to
VolumePremarket and after-hoursLiquidityOrder bookLimit order
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms