The bid-ask spread indicator is typically expressed in terms of basis points, or fractions of a percentage point, and can be used to evaluate the strength of a particular market or security. A wide bid-ask spread indicates low liquidity and may suggest that it will be difficult to buy or sell the security at a fair price. In contrast, a narrow bid-ask spread suggests high liquidity and a more efficient market.
Traders and investors often use bid-ask spread indicators to inform their trading strategies, as a wide spread can indicate an opportunity to make a profit through buying low and selling high, while a narrow spread may suggest that the market is fairly priced and not offering significant opportunities for profit.
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