Bid-ask spread

The bid-ask spread is the gap between the best price to sell (bid) and the best price to buy (ask). Buy at the ask, sell at the bid, and you are down the spread before anything moves. It shrank from about six cents to one when US prices went decimal in 2001, it is what the market maker earns for the seconds before his hedge, and when it widens with no news, that is the news. Spreads and fees on Mochatrade.

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In the help centreSee the order types available on Mochatrade
  • Market makerA market maker quotes a price to buy and a slightly higher price to sell all day and earns the spread. Since US prices…
  • Short sellingShort selling is selling a borrowed share to buy it back cheaper. The loss is open-ended if the price rises, the…
  • Hard to borrowA hard-to-borrow stock is one where lenders have few shares left, so the borrow fee jumps and shorts can be recalled.…
  • Order bookAn order book is the list of every resting buy and sell order, bids on one side and asks on the other, sorted by…
  • Long and short positionA long position profits when the price rises; a short position profits when it falls. On a contract on the price…
  • PCEPCE, the personal consumption expenditures price index, is the inflation measure the Fed targets at 2%, published by…

Educational content only. Not investment advice. Leveraged products magnify losses as well as gains.

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