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Bid-Ask Spread

This trading concept is called such in light of its gap between the most minimal asking price which is also called the “sell order” and the highest bid price, also called “buy order”. A Bid-Ask price may be produced through two ways:

1.It can be created by either a broker or a trading intermediary in the aim of monetizing for the service that that they offer. 

2.It can be produced through the differences between the limit orders that traders place on an open market. 

In the more traditional markets, the Bid-Ask Spread is usually used to monetize from trading endeavours. For instance, there are a number of brokers and trading platforms that offer services that are free of commissions so as to be able to solely monetize them through the use of the Bid-Ask Spread. This had been made possible through the liquidity that these provide to the market. What this means is that the sellers and buyers should be able to accept the price set by the broker.

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