Investing for Beginners .EU, investing

investingforbeginners.eu Don't try to buy at the bottom and sell at the top. It can't be done except by liars.
Bernard Baruch

Investment Dictionary


Browse by search:

Browse by Letter: A B C D E F G H I J K L M N O P Q R S T U V W X Y Z All

Bid-Ask Spread

 

Bid-ask spread is the difference between the bid price and the ask price, or in other words it is a difference between the best offered price of a seller and the best given price by a buyer for a particular security at a particular moment. The ‘bid-ask spread’ is not a stable ratio but usually do not change dramatically, and stocks of low liquidity have high spread between the bid and ask.

 

The ‘bid-ask spread’ is very important at investing because it creates additional costs for investors. If investor is trading a lot and he is hurrying to buy at a bid or ask price but average market price stays the same, he inevitably will face losses because of the ‘bid-ask spread’.

 

Blue chip stocks usually have very low spread between bid and ask prices. When investor checks the ‘bid-ask spread’ in the stock market, he also should check for the amounts offered together with bid and ask prices.






Last searches: pref , pig , guidelines , hedge , healthcare , terminal , takeover , private market , standard , capital adequacy ratio , investing , investment , beginners , stocks