Library term·Microstructure
Bid-Ask Spread
The difference between the highest price a buyer will pay (bid) and the lowest price a seller will accept (ask). Your immediate transaction cost.
Authored by·Editorially reviewed
Onur Erkan YıldızFounder, Financial Engineer · CMB-licensed
Higher education in Financial Engineering and Money & Capital Markets. SPK (Turkey CMB) licence. 16 years across institutional markets, research, and quant-driven analytics.
Why it exists
Markets are bilateral: someone has to make a price for both directions. Market makers post quotes wide enough to compensate for inventory risk and adverse selection. The narrower the spread, the more efficient (and competitive) the venue.Order of magnitude
- EUR/USD interbank: 0.1–0.3 pips during London/NY overlap.
- EUR/USD retail (raw + commission): 0.0–0.5 pips + ~$3–7 per lot round-turn.
- Gold (XAU/USD) retail: 0.20–0.50 dollars (20–50 cents).
- Crypto major pairs: 0.5–5 bps on top exchanges.
How it bites
Spread is paid on entry: opening a long means buying the ask and watching your unrealized P&L immediately read negative until price moves up by one full spread. On scalping systems, spread alone can flip an edge upside-down.
How Finvestopia surfaces it
The instrument detail page shows the live mid, bid, ask and spread at all times. The Radar setups assume executable mid; if your broker’s spread is materially wider, recompute R:R before acting.Related entries
Educational content authored by our team — informational only, not investment advice.