August 30th, 2021 | Updated on March 4th, 2022
The bid-ask on stocks, also known as the “spread” is the difference between a stock’s bid price and its ask price. Individual stock exchanges like the New York Stock Exchange or NASDAQ work with stock specialists and brokers to set a security’s bid and ask.
The bid-ask spread is also the key in buying a security for the best possible price. Normally, the ask price is higher than the bid price, and the spread is what the broker or market maker earns in profit from managing a stock trade execution.
In essence, the bid is the price that an investor is willing to pay to buy a particular stock, at a given time, and the ask is the price for which an investor is willing to sell a stock at a specific point in time.