The bid-ask spread is the difference between an asset's ask price and bid price.
Bid-ask spread = Ask price − Bid price
If a stock has a bid of $100.00 and an ask of $100.10:
$100.10 − $100.00 = $0.10
The bid-ask spread is $0.10 per share, or 10 cents.
Bid-Ask Spread Calculator
| Item | Example |
|---|---|
| Bid price | $100.00 |
| Ask price | $100.10 |
| Spread in dollars | $0.10 |
| Midpoint price | $100.05 |
| Percentage spread | Approximately 0.10% |
How to Calculate the Spread as a Percentage
To express the spread as a percentage, divide the dollar spread by the midpoint price:
Percentage spread = (Ask − Bid) ÷ Midpoint × 100
First, calculate the midpoint:
Midpoint = (Bid + Ask) ÷ 2
Using a $100.00 bid and a $100.10 ask:
Calculate the dollar spread
$100.10 − $100.00 = $0.10
Calculate the midpoint
($100.00 + $100.10) ÷ 2 = $100.05
Calculate the percentage spread
$0.10 ÷ $100.05 × 100 = approximately 0.10%
The percentage bid-ask spread is therefore about 0.10%.
What Are the Bid and Ask Prices?
The bid price is the highest price a buyer is currently willing to pay.
The ask price is the lowest price a seller is currently willing to accept.
The bid-ask spread is the difference between those prices.
| Quote | Price |
|---|---|
| Bid | $50.20 |
| Ask | $50.25 |
| Bid-ask spread | $0.05 |
The calculation is:
$50.25 − $50.20 = $0.05
How Much Does the Spread Cost?
When you buy immediately, you normally pay the ask price. When you sell immediately, you normally receive the bid price.
For one share quoted at:
- Bid: $100.00
- Ask: $100.10
A buy-then-sell transaction would work like this:
- Buy at $100.10
- Sell at $100.00
- Lose $0.10 per share, before commissions, fees and price movements
For 100 shares:
$0.10 × 100 = $10
The estimated immediate spread cost is $10.
This estimate assumes the bid and ask stay unchanged. In practice, the quote may move, an order may be partially filled, or a market order may receive a different price because of slippage.
How to Calculate the Spread in Pips for Forex
Forex spreads are often quoted in pips.
Suppose EUR/USD has the following quote:
- Bid: 1.08420
- Ask: 1.08435
The price spread is:
1.08435 − 1.08420 = 0.00015
For a five-decimal EUR/USD quote, 0.00015 equals 1.5 pips.
The pip calculation depends on the currency pair and the number of decimal places used by the broker.
How to Interpret the Bid-Ask Spread
A narrow spread generally means less trading friction. A wide spread makes it more expensive to enter and exit a position.
Spreads are often narrower for highly liquid stocks, major forex pairs and actively traded futures. They can widen during:
- Market openings
- Major news announcements
- Low-volume periods
- High-volatility conditions
A lower percentage spread makes it easier to compare trading costs across assets with different prices.
Key Bid-Ask Spread Formulas
Dollar spread
Ask price − Bid price
Midpoint price
(Bid price + Ask price) ÷ 2
Percentage spread
(Ask price − Bid price) ÷ Midpoint price × 100
Estimated spread cost
Spread × Number of shares or units
For most comparisons, use the percentage spread based on the midpoint. It shows the spread relative to the asset's price.