The bid-ask spread is the gap between the highest price anyone is bidding to buy a security and the lowest price anyone is asking to sell it. If a stock is quoted at $14.20 bid and $14.40 ask, a seller can get $14.20 right now, a buyer must pay $14.40, and the 20-cent difference is the spread. It is the price of trading immediately: someone who buys at the ask and sells straight back at the bid loses the whole spread even if the quotes never move. For stocks and ETFs the quotes come from exchanges and other trading venues, as how the stock market works explains, and the stocks hub covers the rest of the basics.
How do you calculate the bid-ask spread?
Subtract the bid from the ask, then divide by the midpoint between them to express the spread as a percentage that can be compared across prices.
Spread (%) = (ask − bid) ÷ ((ask + bid) ÷ 2) × 100
The midpoint is the usual reference because it sits halfway between what buyers pay and what sellers receive. Measured from it, each side of a trade costs half the spread, so a round trip, a purchase followed by a sale at unchanged quotes, costs all of it:
Round-trip spread cost = (ask − bid) × number of shares
Regulators build on the same pieces. SEC rules define the quoted spread as the national best offer minus the national best bid, and the effective spread of a buy order as double the difference between its fill price and the midpoint when the order arrived. A fill better than the displayed ask therefore shows up as an effective spread smaller than the quoted one. For ETFs, Rule 6c-11 requires each fund's website to show a 30-day median bid-ask spread: the quoted spread divided by the midpoint, taken at the end of every 10-second interval of each trading day, with the median rounded to the nearest hundredth of a percent.
What does a round trip cost?
A $10,000 round trip on October 30, 2026 cost about $1 in iShares' Core S&P 500 ETF but about $38 in a thinly traded iShares emerging-markets fund.
Worked example: Round-trip spread cost on four securities
The two ETF rows use the 30-day median spreads iShares published for October 30, 2026. The stock and Treasury bill quotes are illustrative.
| Security | Quote or median spread | Spread as % of midpoint | Round trip on $10,000 |
|---|---|---|---|
| iShares Core S&P 500 ETF (IVV), about 4.7 million shares a day | 0.01% median | 0.01% | About $1 |
| iShares MSCI Emerging Markets Quality Factor ETF (EQLT), about 1,000 shares a day | 0.38% median | 0.38% | About $38 |
| Small-company stock | $14.20 bid, $14.40 ask | 1.40% | About $140 |
| 26-week Treasury bill with 182 days left | 4.12% bid, 4.10% ask, as discount rates | 0.010% | About $1 |
- The stock: 500 shares bought at $14.40 cost $7,200, and selling them straight back at $14.20 brings in $7,100, so $100 is gone. The bid has to rise 1.41% before a sale returns the purchase price.
- The bill: at a 4.10% discount, $10,000 of face value costs $9,792.72, and at 4.12% it sells for $9,791.71. Treasury's market quote for the 26-week bill that afternoon was 4.11%, between the two.
- The ETF figures are rounded to the nearest hundredth of a percent, so IVV's 0.01% could be anything from 0.005% to 0.015%, or 50 cents to $1.50 on $10,000.
The percentage stays the same for $1,000 or $10,000 as long as the order fits within the shares displayed at the bid and the ask; a bigger order reaches past the best quotes into worse prices, which is slippage. Frequency matters more than size. A buy-and-hold investor in IVV pays the spread once in and once out, against an expense ratio of 0.03% every year. Ten round trips a year in the small-company stock above would cost about $1,400 on a $10,000 position, 14% of it.
What makes spreads wider?
Spreads widen when fewer traders are willing to take the other side or when prices are moving fast, because whoever quotes both sides is taking more risk.
- Low volume and small size. FINRA notes that illiquid investments often have wide spreads and that large-cap stocks are usually more liquid than small- or micro-cap ones. The two iShares funds above differ in average daily volume by a factor of about 4,600 and in median spread by a factor of 38.
- Volatility and stress. In a crisis or a volatile market, FINRA says, investors crowd into the most liquid securities, and illiquid ones can become even less liquid. Whoever posts a quote risks being run over by the next price jump and protects against that by quoting wider.
- Extended hours. Outside the regular session, 9:30 to 4:00 Eastern time, fewer traders are quoting. The SEC's investor bulletin says the reduced trading interest "generally results in wider spreads between the bid and ask prices for a stock or no quotes at all," and FINRA Rule 2265 makes brokers warn customers about wider spreads before they trade in those sessions. Exchange overnight sessions have a target start of December 6, 2026, pending readiness of the consolidated data feeds and any remaining SEC rule changes; extended-hours trading covers the rules.
- Low prices and the tick size. Quotes on stocks priced at $1 or more move in steps of at least 1 cent, so the narrowest possible spread is 0.50% of the price on a $2 stock and about 0.07% on a $14 stock. The SEC adopted a half-cent step in 2024 for stocks whose time-weighted average quoted spread is 1.5 cents or less, but on June 11, 2026 it pushed compliance to the first business day of November 2027.
Where do you see bid-ask spreads?
Every quote screen shows the bid and the ask, and several required disclosures turn the gap between them into a number that can be compared.
- Order tickets and quote pages show the bid and the ask, often with the shares available at each price, as laid out in how to read a stock quote. Data pages such as the one for SPY show a recent trading price, updated hourly, which is not the price a new order will get.
- ETF websites carry the 30-day median spread next to the fund's net asset value and its premium or discount, so a fund's typical trading cost can be checked before buying.
- Rule 605 reports come out monthly from market centers and from brokers with 100,000 or more customer accounts. Broken down by security, order type and order size, they list average quoted and effective spreads and the ratio between them.
- Bond and bill quotes are given in yield as well as price. For a bill the bid rate is higher than the ask rate, because a higher discount means a lower price; selling Treasuries before maturity covers what that means for an early sale.
How is the bid-ask spread different from slippage, commissions and premiums?
The spread is one of several costs that separate a quoted price from what a trade actually returns, and each is measured differently.
| Term | What it measures | What drives it |
|---|---|---|
| Bid-ask spread | Gap between the best bid and the best ask at one moment | Competition among buyers, sellers and market makers |
| Effective spread | Twice the gap between a fill and the midpoint when the order arrived | Where and how the order was filled |
| Slippage | Difference between the expected price and the average price obtained | Order size, speed and market moves |
| Commission | Broker's fee for handling the trade | The broker's price list |
| Premium or discount | Gap between an ETF's market price and its NAV | Supply and demand for the fund's shares |
| Credit spread | Extra yield on a bond over a Treasury of similar maturity | Default and liquidity risk |
Even at a broker that charges no commission, a stock sale usually carries the SEC's Section 31 fee of $20.60 per $1 million of sales, passed on by the broker, which is tiny next to the spread on most trades. Spreads and liquidity are closely linked, but a narrow quote for 100 shares says little about the price for 10,000.
Which spread mistakes cost traders most?
Most spread mistakes come from treating the last trade, or a fund's typical spread, as the price an order will actually get.
- Using the last trade as the price. In a thin security the last trade may be minutes old, and a market order buys at the current ask, which can be well above it. A limit order caps the price, at the risk of no fill, as stock order types explains.
- Counting half the spread for a round trip. Each side costs half the spread measured from the midpoint, but buying and then selling costs all of it.
- Assuming the median holds at every moment. An ETF's published figure is a 30-day median, so half the time the spread was wider, and in a stressed market or outside regular hours it can be far wider.
- Reading bill quotes backward. A bill quoted at 4.12% bid and 4.10% ask is not crossed: the bid shows the higher rate because it is the lower price.