GLOSSARY TERM
Bid-Ask Spread
The bid-ask spread is the small difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept.
What does this mean in practice?
When you buy an ETF or stock, you usually pay the ask price. When you sell, you usually get the bid price. The spread is the gap between those two prices. It is a small trading cost, even if no separate fee is shown. A narrow spread usually means the investment is traded often and easily. A wider spread can mean lower trading activity or less liquidity.
Example
If the bid price is €99.90 and the ask price is €100.00, the bid-ask spread is €0.10.
Why it matters
For long-term investors, the bid-ask spread is usually a small cost, but it still matters. It is one more reason to prefer simple, widely traded funds and avoid unnecessary buying and selling.
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