I keep seeing a gap between the bid and the ask when I pull up a quote, and sometimes it’s a penny and sometimes it’s much wider. I’ve noticed I’m often down a little the instant my order fills, before the stock has even moved. Is that spread actually costing me, and what makes it get so wide on some tickers?
1 Answer
The bid is the highest price buyers are currently willing to pay; the ask, or offer, is the lowest price sellers will accept, and the spread is the gap between them. It exists because whoever posts those quotes, typically market makers, earns that gap as payment for standing ready to trade and for carrying inventory they may not want.
You pay it because you buy at the ask and sell at the bid. Buy and instantly sell and you lose the full round-trip spread before the price moves. A market order crosses the spread at once, so a wide spread means you start underwater and pay again on the exit. The mid-price shown is a reference point, not a guaranteed fill.
Several things widen the quoted spread. Low liquidity: fewer resting shares and fewer competing makers mean a bigger gap, which is why a thin small cap trades far wider than a heavily traded name like SPY. Volatility: when prices jump, makers widen quotes to avoid being picked off, which is why spreads also balloon around the open and the close. A separate cost is order size: a large order can exceed what sits at the best price and walk the book into worse levels, called slippage, on top of the spread. Thin sessions like pre-market and after-hours widen quotes too.
Because the cost is baked into the fill price rather than billed as a fee, it hides easily. Limit orders, liquid names, and sizing to available depth all shrink what it quietly takes.
SML NewsAugust 30, 2026Sign in to answer this question.
