In everyday trading talk, the spread is the distance between what buyers are bidding and what sellers are offering. A narrow spread usually means a liquid market where you can trade close to mid price. A wide spread is a hidden cost: you buy high and sell low relative to the midpoint simply by crossing the market.
Key takeaways
- Spread is a real trading cost even before broker commissions.
- Thin order books often show wider spreads.
- Limit orders can reduce the chance of paying the full spread.
- Compare spreads across names before treating two shares as equally easy to trade.