The bid-ask spread is the gap between the highest price a buyer is willing to pay for an asset (the bid) and the lowest price a seller will accept (the ask), according to definitions given in near-identical terms by Chainlink, Wall Street Prep, Bitcoin.com Markets, IG International and the U.S. Securities and Exchange Commission. It is a real cost, not a theoretical one: a trader who buys at the ask and immediately sells at the bid loses the spread, and pays it again on the way out if they hold the position and later close it.
The two formulas
The absolute spread is simple subtraction: ask price minus bid price, per Chainlink’s educational page (last updated 15 May 2026), Wall Street Prep (updated 1 May 2024) and CalculatorSoup’s bid-ask calculator page (last updated 10 June 2026). On its own, the absolute spread does not tell you whether a cost is large or small relative to the asset’s price, so most of the sources convert it to a percentage.
Here the sources diverge on which price to divide by. Wall Street Prep, Bitcoin.com Markets and Chainlink all define percentage spread as the absolute spread divided by the ask price, multiplied by 100. CalculatorSoup, which offers both formulas on its calculator page, labels the ask-based version “the most common retail and broker convention” and says the alternative — dividing by the midpoint, the average of the bid and ask — is the convention commonly used in academic and institutional settings. Wikipedia’s article on the bid-ask spread defines what it calls the “quoted spread” using the midpoint denominator, which lines up with the academic convention CalculatorSoup describes rather than the ask-based one used by the other outlets. CalculatorSoup notes the two versions are “close for narrow spreads and diverge as the spread widens” — meaning a reader comparing a spread percentage from one platform against another cannot assume they are looking at the same calculation.
A worked example: the same nickel, different percentages
Chainlink’s page walks through a stock quoted at $100.05 ask and $100.00 bid. The absolute spread is $0.05. Divided by the $100.05 ask, that comes to roughly 0.05%. Chainlink then compares this with a lower-priced asset quoted at $10.05 ask and $10.00 bid — the same $0.05 absolute spread, but divided by the $10.05 ask it works out to roughly 0.50%, ten times higher in relative terms. The lesson from Chainlink’s own example is that price level alone can make an identical dollar spread look ten times more expensive as a percentage, independent of how liquid the market actually is.
Wall Street Prep runs a similar example with a share trading at $24.95, where the bid is $24.90 and the ask is $25.00. The absolute spread is $0.10, and dividing that by the $25.00 ask gives 0.40%, per Wall Street Prep (updated 1 May 2024). Chainlink separately notes that tick size — the smallest allowed price increment — sets a floor on the percentage spread: with a one-cent minimum tick, a $1 asset has a minimum possible spread of 1%, while a $100 asset has a minimum possible spread of 0.01%, according to Chainlink (15 May 2026). Lower-priced assets are structurally prone to wider percentage spreads for this reason alone, before liquidity or volatility enter the picture.
The round-trip cost: you pay it twice
None of the single-price examples above show the full cost of a trade, because a trader who enters and later exits a position crosses the spread on both sides. Natixis Investment Managers illustrates this for exchange-traded funds: with an intrinsic value of $40, a market maker might quote a bid of $39.95 and an ask of $40.05, a $0.10 absolute spread, per Natixis (9 January 2024). Natixis states that the investor pays half that spread on the purchase and half on the sale — the cost is baked into the entry price and the exit price separately, not charged once. Natixis also gives a second illustration of how price level changes the percentage cost of an identical ten-cent spread: on a $40 ETF, $0.10 works out to 0.25% (25 basis points); on a $100 ETF, the same ten cents is only 0.1% (10 basis points), per Natixis (9 January 2024).
What widens a spread
Three factors recur across the sources. Liquidity is the one every outlet cites: more buyers and sellers competing to trade narrows the spread, while thin markets with few participants widen it, according to Chainlink, Wall Street Prep, Bitcoin.com Markets and IG International. Volatility is the second: during sharp or uncertain price moves, market makers widen their quotes to protect against being caught holding inventory that loses value before they can offload it, per Chainlink and IG International. Tick size and exchange or brokerage fees are the third, structural factor, per Chainlink — a fixed minimum price increment sets a floor on the spread that liquidity alone cannot close.
Crypto spreads and fragmentation across venues
Bitcoin.com Markets’ glossary page gives a crypto-specific example: a Bitcoin quote with a $95,970 bid and a $96,000 ask, a $30 absolute spread that it calculates as roughly 0.03125%. That page does not carry a visible publication date, so the quote should be read as an illustrative snapshot of the mechanism rather than a dated market observation. Bitcoin.com also distinguishes spread from slippage: spread is the bid-ask gap at a given moment, while slippage is the difference between an expected trade price and the price actually filled, which can occur when an order is larger than what is available in the order book at the quoted price. Chainlink separately makes a point about market structure: because crypto trades simultaneously across many venues, one exchange’s quoted spread for an asset can differ from another’s, since each venue’s spread reflects only the orders sitting on that particular book at that moment. Chainlink says this gap between venues creates arbitrage opportunities and is why aggregating data across exchanges matters for pinning down an asset’s true global market price.
The quoted number can overstate what you actually pay
Wikipedia’s article on the bid-ask spread sets out three related but distinct measures. The “quoted spread” is the posted bid-ask gap, expressed as a percentage of the midpoint. The “effective spread” corrects for the fact that dealers sometimes fill an order at a better price than the posted quote — what Wikipedia calls “trading inside the spread” — so quoted spreads “often over-state” the cost a trader ends up paying. The “realized spread” goes a step further, isolating the cost of getting immediate execution from the separate cost of trading against better-informed counterparties. The practical point for a reader is that a spread figure pulled from a live quote screen is an upper-bound estimate of transaction cost, not necessarily the exact amount paid.
What this page does not tell you
Every number above is a textbook or worked example supplied by the outlet that published it — Chainlink’s $100.05 stock, Wall Street Prep’s $24.95 share, Natixis’s $40 ETF, Bitcoin.com’s roughly $96,000 Bitcoin quote — not a live, timestamped market observation. None of the sources in this evidence set provide a current order-book snapshot for any specific asset, so this page cannot tell a reader what the spread is on any security or token today.
The SEC’s own definition, last modified 18 December 2002 according to its page, describes spread only in the context of over-the-counter market makers. It is not a description of the crypto exchanges or electronic order-book markets discussed elsewhere on this page, and it should not be read as a current regulatory statement on how spreads work in those markets.
None of the sources held disclose which percentage-spread formula — ask-based or midpoint-based — any specific real exchange, broker or data aggregator uses when it publishes a “spread” figure on its own platform. A reader comparing a spread percentage across two trading apps or data providers cannot assume the two numbers were calculated the same way without checking each provider’s own methodology, and this page has no evidence on what any individual platform actually uses.
Finally, Bitcoin.com Markets, IG International and Wikipedia’s article, all cited above for their examples and frameworks, carry no visible publication date in the evidence reviewed for this page, so any numbers or classifications drawn from them should be treated as illustrative rather than current.
Sources
Every fact above is attributed to one of these reports. Where they disagree, the article says so.
