Bid-Ask Spread

The gap between the highest price a buyer will pay and the lowest a seller will accept.

The bid-ask spread is the difference between the bid price (what buyers will pay) and the ask price (what sellers want). It represents a transaction cost and a source of profit for market makers. Narrow spreads indicate a liquid market; wide spreads indicate thin trading or high risk.

On thinly traded stocks the bid-ask spread can be wide, so you pay more to buy and receive less to sell.