The Bid-Ask Spread is the difference between the bid price (highest price a buyer is willing to pay) and the ask price (lowest price a seller is willing to accept).
Bid-Ask Spread = |Ask Price - Bid Price|
Mid Price = (Bid Price + Ask Price) / 2
Welcome to the Bid-Ask Spread Calculator information page. This tool helps traders and investors quickly calculate the bid-ask spread for stocks, commodities, foreign exchange (forex), or any other financial asset. The bid-ask spread is an essential metric for understanding market liquidity and transaction costs.
The bid-ask spread is the difference between the bid price (the highest price a buyer is willing to pay for an asset) and the ask price (the lowest price a seller is willing to accept). A smaller spread usually indicates higher liquidity, while a larger spread often suggests lower liquidity.
In simpler terms, the bid-ask spread tells you how much the price of an asset can vary between buyers and sellers. Traders typically aim to buy at the bid price and sell at the ask price to profit from the difference.
Example 1: Stock Bid-Ask Spread
Let’s say you are trading stocks, and the bid price is $100, and the ask price is $100.50.
Bid-Ask Spread = Ask Price - Bid Price = 100.50 - 100 = 0.50
So, the bid-ask spread is $0.50.
Example 2: Forex Bid-Ask Spread
In the foreign exchange market, the bid price for EUR/USD might be 1.2050, and the ask price could be 1.2053.
Bid-Ask Spread = Ask Price - Bid Price = 1.2053 - 1.2050 = 0.0003
So, the bid-ask spread in this case is 0.0003 (3 pips).
Example 3: Commodity Bid-Ask Spread
In the commodity market, if the bid price for gold is $1,800 per ounce, and the ask price is $1,802 per ounce:
Bid-Ask Spread = Ask Price - Bid Price = 1,802 - 1,800 = 2
So, the bid-ask spread for gold is $2 per ounce.