What Is the Bid-Ask Spread? How to Calculate It, Tested on 622 Markets

Michael Whitman · Trading since 2017, full-time since 2020 · YouTube creator, 137K subscribers · Published 2026-09-06 · Updated 2026-11-02 · Reviewed 2026-11-01

The bid-ask spread is the gap between the highest price a buyer is offering (the bid) and the lowest price a seller will take (the ask). Buy now and you pay the ask; sell now and you get the bid, so the spread is the price of trading immediately, charged on the way in and again on the way out.

How it forms

Two crowds and a gap. Buyers willing to wait post bids below the last price; sellers willing to wait post asks above it. Both sit in the order book, and the spread is the distance between the best of each. It can never close to zero: a bid that met an ask would trade, and both would leave the book.

Someone is paid for standing there. Firms that quote both sides all day, market makers in the strict sense, carry three costs the gap has to cover: holding inventory while the price moves, trading with someone who knows more than they do, and running the business. That is the textbook account, and it fits what the data below shows: where many firms compete to quote, they undercut each other until the gap is tiny, and where few bother, it stays wide.

The tick sets a floor. Prices move in fixed steps: one cent for SPY options, ten cents for bitcoin on Kraken. A spread cannot be narrower than one step, so the busiest markets often sit at exactly one tick and compete on queue position instead of price. Seen another way, a wide spread is a book that has not found a clearing price, the level at which the quantity bid matches the quantity offered.

How to calculate the bid-ask spread

Three versions of one number. In money, spread = ask − bid. As a share of price, divide by the midpoint, (bid + ask) ÷ 2. In basis points, multiply that share by 10,000; one basis point is 0.01%, the unit used below because crypto spreads are often far smaller than a percent.

The round-trip cost. Buy at the ask, sell straight back at the bid, and you lose (ask − bid) on every unit you bought, which works out to the spread divided by the ask. That is before any fee or commission, and a zero-commission broker has removed the fee line, not this cost.

Quoted versus effective. The quoted spread is what the screen shows. The effective spread is twice the distance between your fill and the midpoint at the moment you sent the order. Fill inside the quote and it is smaller; send an order big enough to walk past the best price and it is bigger. Only the effective spread is a fact about your own trade.

The spread is also the first thing to read in the order book, before the size near the price. On Kraken’s BTC/USD book on 28 October 2026, the largest order near the price stayed a median 30 seconds.

A worked example

Two real quotes from the same minute. Kraken’s ticker at 05:51 UTC on 2 November 2026 (late Sunday evening in the US) showed bitcoin, BTC/USD, bid $78,297.30 and offered $78,297.40, a spread of $0.10, one tick. The same snapshot showed SUN/USD, a coin that had traded $7,493.22 in the previous 24 hours, bid $0.01531 and offered $0.0154.

Bitcoin, $1,000 in and straight back out. $1,000 ÷ $78,297.40 buys 0.01277182 BTC. Sold at the $78,297.30 bid, that returns $999.998723. The spread cost $0.001277, about a tenth of a cent, or 0.0128 basis points.

The thin coin, same trade. $1,000 ÷ $0.0154 buys 64,935.06 SUN. Sold at $0.01531, that returns $994.16. The spread cost $5.84, or 58.44 basis points of the $1,000: roughly 4,600 times the bitcoin cost, for the same dollars in the same minute. Fees come on top: Kraken Pro’s lowest-tier taker fee of 0.80% a side (fee schedule read 2 November 2026) adds about $16 to either round trip, nearly three times the thin coin’s spread.

Put a target next to it. A trade in the thin coin aiming for a 1% move gives more than half a percent of it to the spread before anything happens, so more than half of the hoped-for gain is spoken for. The same target in bitcoin loses almost nothing. Nothing about the trader differs between the two; only the market’s activity does.

The original data

What was measured. Every pair Kraken listed as open for trading against the US dollar, 622 of them (34 more were set to cancel-only or post-only and are left out), from its public ticker 15 times about a minute apart between 05:34 and 05:51 UTC on 2 November 2026. For each pair: the quoted spread in basis points of the midpoint at each snapshot, then the median of the 15. Each pair was grouped by the dollars it traded in the previous 24 hours (24-hour quantity times the 24-hour average price). The check repeats it on Coinbase Exchange: all 405 online USD products, two passes about eight minutes apart.

The spread fell at every step up in trading. On Kraken the median spread was 58.72 bp for the 288 pairs that traded under $10,000 in 24 hours, 24.86 bp for the 210 at $10,000 to $100,000, 12.60 bp for the 90 at $100,000 to $1 million, 3.13 bp for the 26 at $1 million to $10 million, and 0.18 bp for the 8 above $10 million.

Wide quotes were common only at the quiet end. 104 of the quietest 288 were quoted 100 bp (1%) wide or more; none of the 34 pairs trading over $1 million was. The rank correlation between a pair’s 24-hour dollars traded and its spread was -0.58.

Coinbase showed the same staircase. Its medians, quietest group to busiest: 36.88 bp (57 products), 25.67 bp (183), 14.05 bp (126), 5.12 bp (31) and 0.93 bp (8), with a rank correlation of -0.54. The levels differ by venue; the direction does not. Every pair, both venues, is in the spread and trading file.

What this can and cannot say. It is one quiet quarter of an hour on a Sunday night in the US, in crypto, where each exchange runs its own book around the clock. It shows that busier markets were quoted tighter; it does not prove why, and the busiest group mixes bitcoin and ether with dollar stablecoins and the euro. A US stock’s quoted spread is the best price across many venues at once, and nothing here measures it.

The same lesson in SPY options. Cboe’s delayed quotes for every SPY option expiring 20 November 2026, as they stood after the 26 October close, give 451 two-sided contracts. Out-of-the-money contracts got cheaper and narrower in cents the further out they sat, and wider as a share of their price. Within 2.5% of the $765.37 close, 38 contracts had a median spread of 4 cents, 0.57% of the midpoint; from 2.5% to 5% away, 38 had 3 cents and 0.92%; from 5% to 10%, 51 had 2 cents and 1.34%; and at 10% or more away, 87 had 1 cent but 13.33%. 98 of the 214 out-of-the-money contracts were quoted exactly one cent wide, the tick floor.

One cent, two prices. The $850 call was bid $0.04 and offered $0.05, so one cent was 22.22% of its midpoint; for the $800 call, bid $1.08 and offered $1.09, the same cent was 0.92%. Nasdaq’s chain, read the same morning, matched both sides on 441 of the 451. Every contract is in the SPY option spread file.

What widens a spread

Less trading. The first chart in one line: the quietest pairs carried spreads hundreds of times wider than the busiest.

Volatility and news. A quote is a promise to trade at a price for a moment, and that promise is riskier when prices jump. Quoters pull back or widen around earnings, economic releases, halts and the first minutes after the open, which is exactly when many traders reach for a market order.

A low price on a fixed tick. One cent is under 1% of a $1.085 contract and more than a fifth of a 4.5-cent one.

Size. The quote is good only for the quantity shown beside it. A bigger order crosses the quoted spread and then pays more at the prices behind it, which is slippage.

When it fails

Treating the quoted spread as the price of your order. It is the price of the size displayed. The order book page measures how fast the cost grows past it.

Trusting a calm-hours number. A spread measured on a quiet night, like the one above, is close to a best case. It widens in exactly the conditions when it is easiest to forget.

Comparing in cents. Two cents on a $100 share is 0.02%; on a $5 share it is 0.4%. Compare in percent or basis points.

Forgetting odd lots. On US stocks, an order smaller than a round lot does not set the national best bid and offer. Since the first business day of November 2025, a round lot is 100 shares for a stock averaging $250.00 or less, 40 shares from $250.01 to $1,000.00, 10 shares up to $10,000.00 and 1 share above that (SEC Release No. 34-104209). A screen can show a tight quote that is not there in the size you want.

Paying it too often. A cost that is trivial once adds up over hundreds of trades. A strategy whose average target is a few times the spread gives back a large share of every winner before it starts, which is why scalping is a costs problem before it is a skill problem.

Questions people ask

What is a good bid-ask spread?

One that is small next to the move you are trading. In the data above, the busiest crypto pairs were quoted well under 1 bp and the quietest group around 59 bp, which is more than half of a 1% target.

How do you calculate the bid-ask spread percentage?

(Ask − bid) ÷ midpoint × 100. For the $800 SPY call: $0.01 ÷ $1.085 = 0.92%.

Who keeps the bid-ask spread?

Whoever was waiting on the other side of the trade, most often a market maker quoting both sides, in return for being ready to buy or sell at any moment.

Does a zero-commission broker still charge the spread?

Yes. Removing the commission removes a line on the statement; buying at the ask and selling at the bid still costs the gap every time.

Why is the spread so wide on some coins and stocks?

Few people trade them, so few firms compete to quote them. On 2 November 2026, Kraken’s pairs trading under $10,000 a day had a median spread of 58.72 bp.

Related

The order book is where the bid and the ask actually live, and the order types page explains which instructions cross the spread and which wait on the far side of it. For the contracts measured above, how to trade options covers the steps, including checking the spread first. A spread that widens sharply under stress is the first sign of liquidity risk, when selling near the last price stops being possible.

This page is educational, not financial advice. Test every idea on your own charts before risking money.