Every quote has two sides:
- Bid — what buyers are currently willing to pay
- Ask (offer) — what sellers are currently willing to accept
- Spread — ask − bid (your friction when you cross the market)
Why it matters
If you buy at the ask and immediately sell at the bid, you lose the spread (plus commissions). Tight spreads = cheaper round trips; wide spreads = expensive.
Where spreads are usually tighter
- Large ETFs and mega-cap stocks in liquid sessions
- Major FX pairs (for FX products)
Where spreads widen
- Small caps, exotic pairs, off-hours
- Stress events
- Some leveraged products
Investor vs trader
| Habit | Spread impact |
|---|---|
| Buy ETF monthly, hold years | Tiny vs market returns |
| Scalp CFDs all day | Spread can dominate results |
Academy vocabulary lessons (pips, bid/ask, leverage) matter most if you trade actively.
Key takeaways
- Spread is a cost, not just trivia.
- Prefer liquid instruments for core holdings.
- High turnover makes spreads painfully relevant.
Educational only — not personalised investment advice.