The spread in a trade (also known as the "BID-ASK spread" or "BID-ASK spread") is the difference between the price of an asset that is immediately bought (ASK) and immediately sold (BID) quoted in the Pendant Book or by the Market Marker or other Provider. Trading assets can be stocks options, futures contracts, foreign exchange pairs or cryptocurrencies.
Spread = sell price-buy price (ASK - BID)
for example, if the selling price of a stock is $12 and the buying price of the same stock is $10.50, the spread of the stock is $1.50.
The size of the spread is one of the characteristics that distinguish market liquidity. Some markets have higher liquidity than others. For example, the money market is generally considered to be the most liquid market in the China Finance Online Co., Ltd. The money market bid-ask spread is very small, about 0.001%, which means that the spread may be measured in pennies or a fraction. Spreads on small caps and other illiquid assets can be as high as 2% of the selling price at the bottom of asset.
