Bid-Ask Spread FAQ — What It Costs and Why It Widens

What is the bid-ask spread?

The gap between the best bid (highest price a buyer will pay) and the best ask (lowest price a seller will accept). It is the immediate cost of entering and exiting a position at market.

spread % = (best ask − best bid) / midpoint × 100
midpoint = (best ask + best bid) / 2

With a best bid of 99.50 and a best ask of 100.50: absolute spread 1.00, midpoint 100.00, spread 1%.

Is the spread a real cost, or just a number?

A real cost. Buying at the ask and immediately selling at the bid returns less than you paid, before any fees.

On a 1% spread, a round trip starts roughly 1% behind. It is not itemised anywhere and no one invoices you for it, which is exactly why it is easy to overlook.

Why should I use percentage rather than absolute spread?

Because absolute spreads are not comparable across assets at different price levels. A spread of 1.00 is enormous on an asset priced at 2 and negligible on one priced at 60,000.

Percentage normalises against the price, so any two markets can be compared.

What makes spreads widen?

Few market makers quoting the pair.
Rising volatility — quoting gets riskier, so quotes get wider or are withdrawn.
News and uncertainty — participants step back rather than be picked off.
Thin hours for the pair's dominant trading population.
New listings, before liquidity is established.

The common thread is risk to the quoting party. A spread is compensation for standing ready to trade with someone who may know more than you.

Does a narrow spread mean I can trade at that price?

Only at the quantity resting there, which is often small.

Your effective spread at size can be far worse. A book quoting 0.999 / 1.001 (0.2%) with 500 tokens per side gives a very different result on a 5,000-token order — potentially 4% or more once you have walked several levels on each side.

Calculate the effective spread at your actual size. See how to measure bid/ask spread.

What is a normal spread for a crypto pair?

Rough orientation rather than benchmarks:

Market	Typical spread
Major asset, deep book	Well under 0.1%
Established mid-size token	~0.1–0.5%
Newly listed, funded	~0.5–2%
Newly listed, unfunded	10%+, or no real two-sided market

The more useful comparison is the same pair against itself over time, and your own effective spread at size.

How does the spread relate to maker and taker fees?

They are different costs with different causes.

A maker places an order that rests on the book and adds liquidity. A taker places one that immediately matches against a resting order and removes liquidity. Exchanges usually charge takers more, because resting orders are what make the market tradable.

Crossing the spread makes you a taker, so you typically pay both the spread and the higher fee. Resting a limit order and waiting means you may earn the spread and pay the lower fee — at the cost of not being certain to fill.

Can I avoid paying the spread?

Partly. Placing a limit order that rests on the book rather than crossing it means you are quoting rather than paying — if someone crosses to you, you have effectively earned the spread instead of paying it.

The cost is uncertainty: your order may not fill. This is the same trade-off as everywhere in execution — immediacy versus price.

Why is the spread wider on my token than on major pairs?

Because fewer participants are willing to quote it continuously, and those who do face more inventory risk holding it.

Spread narrows as more participants compete to quote. For a project, that means the answer is not to complain about the spread but to fund the book and attract quoting. See liquidity for new coins.

Should I judge a market by its spread?

Not on its own. Spread and depth together describe liquidity, and either alone misleads.

A tight spread with no depth evaporates on contact. A wider spread with substantial depth may be far more useful — a large order fills predictably, just at a known cost. Check depth first, then spread.

Bid-Ask Spread — Frequently Asked Questions