What is the bid?
The bid is the price buyers are offering. The best bid is the highest displayed buy price currently available in the order book.
What is the ask?
The ask is the price sellers are offering. The best ask is the lowest displayed sell price currently available.
What is the spread?
The bid-ask spread is the difference between the best ask and best bid.
A narrow spread generally means the nearest buyers and sellers are priced relatively close together. A wide spread means there is a larger gap.
Simple spread
If the best bid is 59,990 and the best ask is 60,000, the absolute spread is 10 USDT.
What the spread can tell you
Spread is one component of trading friction and often relates to liquidity and volatility, but it should not be interpreted alone.
A tight spread does not guarantee deep liquidity. There may be very little quantity available at the best prices.
Common mistakes
Looking only at spread
Market depth matters because available quantity determines how much can execute near the quoted price.
Confusing last trade with bid or ask
The last traded price is a completed transaction; bid and ask are currently displayed interest.
Key takeaways
- Best bid is the highest displayed buying price.
- Best ask is the lowest displayed selling price.
- The spread is the difference between best ask and best bid.
- Spread and market depth should be considered together when thinking about execution.
Sources & further reading
This lesson is educational material. Market structure, exchange rules, fees, margin requirements and derivatives mechanics can differ by venue and can change over time. Verify current rules with the venue you use.