![]() ![]() This can be calculated by using the lowest Ask Price (best sell price) and highest Bid Price (best buy price). So, all price points cannot be used to calculate Bid-Ask Spread. ![]() So the Bid-Ask Spread is equal to (Rs 26,478-Rs 26,473) = Rs 5 and the percentage spread will be equal to ((5/26,478)*100) = 0.019% There can be various buyers and sellers in the market and they may be willing to buy/sell any security at different price points. When the market is highly liquid, spread values can be very small, but when the market is illiquid or less liquid, they can be large.ĭescription: Calculation of Bid-Ask Spread:īid-Ask Spread (absolute) = Ask/Offer Price – Bid/Buy Price Bid-Ask Spread (%) = ((Ask/Offer Price- Bid/Buy Price) – Ask/Offer Price)*100Įxample: Gold (December) futures contract on MCX has best buy price at Rs 26,473 and best sell price at Rs 26,478. The larger the gap, the greater the spread! Bid-Ask Spread can be expressed in absolute as well as percentage terms. These prices are determined by two market forces - demand and supply, and the gap between these two forces defines the spread between buy-sell prices. when a buyer and a seller agree to the prices being offered by each other, a trade takes place. ![]() When the two value points match in a marketplace, i.e. Ask price is the value point at which the seller is ready to sell and bid price is the point at which a buyer is ready to buy. ![]() Definition: Bid-Ask Spread is typically the difference between ask (offer/sell) price and bid (purchase/buy) price of a security. ![]()
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