Bid-Ask Spread
Diferença entre o maior preço de compra e o menor preço de venda de um ativo no livro de ofertas, um indicador direto da liquidez do mercado.
Key points
- The spread is the difference between the highest buy price, the bid, and the lowest sell price, the ask, in the order book.
- Narrow spreads indicate a liquid and competitive market; wide spreads signal low liquidity and a higher implicit cost to enter or exit a position.
- For those using market orders, the spread is a real cost: the trade executes against the best available price on the other side of the book.
What is the bid-ask spread?
The bid-ask spread is the price difference between the lowest sell offer and the highest buy offer recorded in an asset's order book. It is a simple number that summarizes, at any given moment, how far apart buyers and sellers are in their price expectations to trade.
How it works
The order book organizes buy orders on one side, in descending order of price, and sell orders on the other, in ascending order of price. The top of each side forms the best bid and the best ask. The distance between them is the spread. If the best bid is R$ 100 and the best ask is R$ 100.50, the spread is R$ 0.50.
The size of the spread reflects liquidity and competition. Heavily traded assets, with many participants, tend to have narrow spreads, because there is always someone willing to improve the offer. Illiquid assets show wide spreads, since there are few orders close to the reference price.
Market makers and liquidity providers profit precisely from the spread: they buy at the bid and sell at the ask, capturing the difference at high volume. For someone sending a market order, that same spread appears as a cost, since execution consumes the best offers on the opposite side.
The spread is also dynamic. It narrows when many participants compete for the best positions and widens in moments of uncertainty, when market makers expand their margin to protect themselves from sharp price movements. Tracking this variation says a lot about a market's momentary health.
Why it matters
For a trader, the spread is part of the transaction cost, alongside fees. In liquid markets, it is nearly negligible; in thin markets, it can exceed the fee charged by the exchange. Assessing the spread before trading helps in choosing between a market order, more immediate, and a limit order, which avoids paying the spread but may not execute.
Risks and limitations
In moments of low liquidity or high volatility, the spread widens and can combine with slippage, raising the effective execution price. Large orders in shallow books consume several price levels, expanding the cost beyond the spread visible at the top of the book.