FREE EXPLAINER · BEGINNER FOUNDATION
Understanding the Bid, Ask and Spread
The bid is the highest current buying price, the ask is the lowest current selling price, and the spread is the gap between them.
The simple explanation
The bid is the highest current buying price, the ask is the lowest current selling price, and the spread is the gap between them.
Why it matters
The spread is an immediate trading cost and a clue about liquidity.
A simple way to think about it
Spreads usually widen when liquidity falls or uncertainty rises. Order-book depth also matters because the best bid and ask may contain few shares.
A common beginner mistake
Looking only at the last traded price.
What to check next
- Check that you understand the definition in plain English.
- Look at the company, market and timeframe rather than one number alone.
- Ask what could change the interpretation.
- Keep risk separate from excitement or certainty.
One calm takeaway
The bid is the highest current buying price, the ask is the lowest current selling price, and the spread is the gap between them. Use it as one piece of context, never as a promise about what happens next.