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Bid, Ask & the Spread
The market-maker's world, and why the spread is the price of liquidity.
Inside this lesson
- Define the bid and the ask, and say which side of the market each represents
- Calculate the bid-ask spread and express it as a percentage of the mid price
- Explain why 'crossing the spread' has a real cost even with no price movement
- Read a wide spread as a signal of lower liquidity and higher trading risk
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Educational content only — not financial, investment, trading, tax, or legal advice, and not an inducement to buy or sell anything. Examples and figures are illustrative, use hypothetical data, and are not predictions. Independent educational material; third-party names are used descriptively and imply no affiliation.