The bid ask spread is the gap between the highest price a buyer will pay and the lowest price a seller will accept, and it is the basic cost of trading right now.
Last reviewed 1 September 2025 · Educational, not advice
The bid ask spread, sometimes called the bid offer spread, is the difference between the best bid, the highest price anyone is currently willing to pay for a contract, and the best ask or offer, the lowest price anyone is currently willing to sell it for. The two prices almost never meet exactly, and the small gap between them is the spread. It exists in every market with separate buyers and sellers, and on a prediction market it is quoted in cents.
The spread is best understood as the price of immediacy. If you want to buy right now you pay the ask, and if you want to sell right now you accept the bid. Crossing from one to the other, in and straight back out, costs you the spread even if the market has not moved at all. That cost is the compensation that whoever provides liquidity earns for standing ready to trade with you, and it is your cost for the convenience of trading on demand.
The width of the spread carries information. A tight spread, a cent or two, usually signals a busy, contested market with plenty of participants and resting orders, where it is cheap to trade. A wide spread signals the opposite, a thin or uncertain market where liquidity providers demand more to take the risk of being filled just before the price moves. Spreads also tend to widen near the extremes of probability and around moments of fresh information.
The spread is related to, but distinct from, slippage. The spread is the gap you cross even on a tiny order. Slippage is the extra cost a larger order incurs by climbing through several price levels when the size at the best price runs out. On a thin book the two together can make the real cost of a trade much higher than the headline price suggests, which is why reading both the spread and the depth before trading is a basic discipline.
One way to use the spread is to look at the midpoint between the bid and the ask as a cleaner estimate of fair value than either quoted price. The midpoint strips out some of the trading cost and gives a better read on what the market actually thinks. It is also why a limit order placed inside the spread, rather than a market order that crosses it, can save you money, at the cost of waiting and possibly not filling.
Suppose a contract shows a best bid of 47 cents and a best offer of 51 cents. The spread is 4 cents. If you buy at 51 and immediately sell at 47, you lose 4 cents per contract before any fees, purely from crossing the spread. The midpoint, 49 cents, is a fairer estimate of where the market values the contract than either the 47 or the 51 you would actually trade at.
Illustrative only. Numbers are examples, not a quote or a prediction, and exclude fees.
A tight spread lowers your cost of trading, not your risk of loss, and a contract can resolve against you whatever the spread. Stake only what you can afford to lose, never to chase a loss, and never on borrowed money. If it stops feeling like a free choice, step back. In the United States you can call or text the helpline on 1-800-GAMBLER or visit ncpgambling.org.
It is the gap between the best bid, the highest price a buyer will pay, and the best ask, the lowest price a seller will accept. The difference is the basic cost of trading immediately, paid to whoever provides the liquidity you take.
A spread widens when a market is thin, uncertain, or hard to hedge, because liquidity providers demand more to risk being filled just before the price moves. Busy, contested markets tend to have tighter spreads. The extremes of probability often trade wider too.
No. The spread is the gap you cross even on a tiny order. Slippage is the additional cost a larger order incurs by climbing through several price levels when the best price runs out. You can pay both at once, but they are different costs.
A limit order placed inside the spread waits for the market to come to you rather than crossing to the other side immediately. It can save you the spread, at the cost of patience and the risk that it never fills. A market order pays the spread for instant execution.
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