Section 1 · Stock Fundamentals
Bid, Ask & the Spread
The hidden cost of every trade — and why it matters more than commission.
The spread is the market's toll booth.
Every stock has two prices: the bid (what buyers will pay) and the ask (what sellers want). The spread is the gap between them. When you buy at the ask and immediately sell at the bid, you lose the spread. On liquid stocks like AAPL, the spread is $0.01. On thin small caps, it can be $0.50 or more — a hidden cost that matters enormously for momentum traders.
3 things to know
A $0.50 spread on a 1,000-share trade costs you $500 before the stock even moves.
AAPL and SPY often trade with a $0.01 spread — extremely liquid.
Wide spreads signal low liquidity — harder to enter and exit cleanly.
Dive Deeper
Key vocabulary — tap each card
Practice
Bid vs Ask — the spread visualized
You always buy at the ask (higher) and sell at the bid (lower).
Did you know?
Before 2001, US stocks were quoted in 1/8 increments ($0.125 minimum spread). Decimalization crushed spreads to $0.01 on major stocks, saving retail traders billions annually.