Spread
The spread is the difference between the bid, the highest price a buyer will pay, and the ask, the lowest price a seller will accept. You pay it, in effect, every time you buy and later sell. The SEC notes that market makers make their money on the spread.
How do bid, ask and spread fit together?
- Bid: the highest price a buyer is willing to pay right now.
- Ask (also called the offer): the lowest price a seller will accept.
- Spread: the gap between the two.
The SEC says the ask will almost always be higher than the bid. So when you buy, you normally pay the higher number. When you sell, you normally receive the lower one. These definitions come from US securities regulators, and the same logic applies on crypto trading screens that show two prices.
How does the spread cost you money?
Imagine you buy and then immediately change your mind. The price has not moved at all, yet you sell back for less than you paid, because you bought at the ask and sold at the bid. That shortfall is the spread. Every round trip starts slightly behind for this reason, before any fees.
To see how costs eat into a result, try our crypto profit calculator.
Why does zero commission not mean free trading?
A platform can charge no commission and still earn from the gap between its buy and sell prices. For leveraged products held overnight there can be more. The UK Financial Conduct Authority (FCA) found in a 2025 review that overnight funding on contracts for difference (CFDs) can be a substantial ongoing cost, and that many firms looked mainly at spread costs when judging value.
What should beginners watch for with spreads?
Know who is on the other side. The US Commodity Futures Trading Commission (CFTC) warns that with an over-the-counter dealer you are trading only against that dealer, and the dealer controls the prices on your screen. The CFTC also stresses that what counts is your result after all fees and financing charges. Check both prices, not just the headline one, before you trade.
Frequently asked questions
Who earns the spread?
The SEC says market makers make their money on it. With a dealer platform, the CFTC notes the dealer is your counterparty on both sides of the trade.
Is the spread the only cost of a trade?
No. Commissions may apply, and for leveraged CFDs the FCA flags overnight funding charges, which apply to the full leveraged exposure.
Sources
- SEC Investor.gov glossary, Bid Price/Ask Price — investor.gov (accessed 2026-10-02)
- SEC, Spread — sec.gov (accessed 2026-10-02)
- CFTC, Customer Advisory: Eight Things You Should Know Before Trading Forex (2022) — cftc.gov (accessed 2026-10-02)
- FCA, Multi-firm review of CFD providers' provision of price and value (2025) — fca.org.uk (accessed 2026-10-02)