What is bid / ask?

The bid is the highest price a buyer is currently willing to pay and the ask is the lowest price a seller will accept.

A market order to buy fills at the ask and one to sell fills at the bid, so you cross the gap between them every time. That gap is the spread.

The single number a price ticker shows is neither of these. It is usually the last traded price or a midpoint, which is a price nobody is currently offering you. When you buy, you pay the ask; when you sell, you receive the bid. The difference is a cost you pay on every round trip and it never appears on a fee statement.

How it works

An order book holds resting limit order entries on both sides, sorted by price. The best bid sits at the top of the buy side and the best ask at the top of the sell side, and no trade happens until one crosses the other.

A market order crosses immediately, consuming the best price available and then the next, and the next, until it is filled. A small order fills entirely at the best level. A large one walks the book, and the average price you get is worse than the top-of-book quote.

Quotes come with size. A tight-looking spread with only $2,000 resting at the best ask tells you almost nothing about what a $100,000 order costs, which is why depth matters as much as the spread itself. That is what market depth measures.

Both sides move continuously as market makers update quotes. Spreads are tightest in deep, actively traded pairs and widen for thin assets, unusual pairs, and periods of stress.

Example

Illustrative order book for an asset. The bid is 60,000 and the ask is 60,030, so the spread is 30, or 5 basis points of the price.

Illustrative. A market buy of 0.3 fills at 60,030. A market buy of 1.0 takes 0.3 at 60,030, 0.8 at 60,060 but only 0.7 is needed, giving an average of about 60,051, or 8.5 bps worse than the top quote.

Why it matters when you buy

The spread is often the largest cost of a small purchase, larger than the trading fee itself, and retail-facing apps frequently earn their money there rather than on a visible commission. Comparing venues on fee alone will mislead you. Check the fee schedule at the fee comparison and the actual spread and depth for your asset at the liquidity pages.

Related terms

• spread — the gap between the two prices
• order book — where both sides rest
• market order — crosses the spread immediately
• limit order — joins a side instead of crossing
• market depth — how much size sits at each level
• slippage — the difference between expected and actual fill

Questions

Which price do I actually pay?

The ask when you buy and the bid when you sell, for orders small enough to fill at the top of the book. Larger orders pay a worse average as they consume deeper levels.

Why is the spread wider on some assets?

Because fewer market makers quote them and less capital sits in the book. Thin assets, unusual trading pairs, and volatile periods all widen the gap.

Can I avoid paying the spread?

Placing a limit order at or inside the current best price means you wait rather than cross, and you may earn a lower fee as a maker. The cost is that the order may not fill at all.