Bid-ask spread

The bid-ask spread is the difference between the highest price a buyer is currently willing to pay for a security, the bid, and the lowest price a seller is currently willing to accept, the ask. Every trade happens somewhere between these two prices.

A narrow spread generally signals a heavily traded, liquid security where buyers and sellers agree closely on price, while a wide spread signals lower liquidity and can mean a meaningfully higher hidden cost to trading, since a buyer pays the ask and a seller receives the bid, not some price in between.