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  • Writer's pictureGlobal MoonXBT

Bid-Ask Spread

The concept is known as the bid-ask spread because it is the gap between the lowest asking price (sell order) and the highest bid price (buy order).

Basically, the bid-ask spread may be formed in two different ways. First, it can be created by a broker (or trading intermediary) as a way to monetize for their service. Second, it can be created just by the differences between the limit orders placed by traders on an open market.

In traditional markets, the bid-ask spread is a common way of monetizing from trading activities. For example, many brokers and trading platforms offer commission-free services that only monetize by making use of the bid-ask spread.

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