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Bid Ask Spread

Bid is the highest price a buyer will pay for a security, stock, or currency. Ask is the lowest price a seller will accept. The bid-ask spread (also called the bid-offer spread) is the difference between them and is calculated as:

Spread = Ask - Bid

In a functioning market the bid is always lower than the ask. If the bid equals the ask the market is locked; if the bid is higher than the ask the market is crossed, and the quote would normally trigger immediate execution.

Bid Ask Spread Percentage

The bid-ask spread percentage — also known as the bid-ask margin or percentage spread — expresses the spread as a percentage of price, making it easier to compare spreads across assets at different price levels. It is also commonly expressed in basis points (bps), where 1% = 100 bps.

This calculator reports two versions:

Spread % (relative to Ask) = \( \dfrac{(Ask-Bid)}{Ask} \times 100 \)

This is the most common retail and broker convention.

Spread % (relative to Mid) = \( \dfrac{(Ask-Bid)}{Mid} \times 100 \)

This is the convention commonly used in academic research and some institutional contexts. The two values are close for narrow spreads and diverge as the spread widens.

The spread percentage can also be viewed as a percentage change relating bid price to ask price.

Mid Price

The mid price (or mid-market price) is the midpoint between the bid and the ask:

Mid Price = \( \dfrac{(Bid + Ask)}{2} \)

The mid price represents the asset's estimated fair value before transaction costs. Traders use it as a benchmark for measuring execution quality and as the reference point for orders that attempt to execute between the bid and the ask, such as midpoint peg orders on some exchanges, to reduce or avoid paying the full spread.