TRADING • GUIDE

Bid-Ask Spread Explained

Understand the bid, ask, spread, depth and why execution price can differ from the last traded price.

The spread is the gap between available buy and sell quotes.

Liquidity

Tighter spreads generally indicate more active trading, but spread alone does not measure all liquidity.

Execution

A market order can execute across available quotes when the order is large relative to displayed depth.

Use

Check spread and depth before trading less-liquid securities.

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