A spread in trading (also known as "bid-ask spread", "bid-offer" or "buy-sell"spread) refers to the difference between the prices for an immediate purchase (ask) and immediate sale (bid) of an asset quoted either in an order book or by a market maker or other provider. A trading asset could be a stock, option, futures contract, Forex pair or cryptocurrency.
SPREAD = ASK – BID
For example, if the ask price for a stock is £12 and the bid price for the same stock is £10.50, the spread for the stock is £1.50.
The size of the spread is one of the features to distinguish market liquidity. Some markets have more liquidity than others. The currency market, for instance, is generally considered to be the most liquid in the financial world. The currency market bid-ask spread is very small, around 0.001%, meaning that the spread can be measured in pennies or fractions of pennies. Small-cap stocks and other less-liquid assets may have a spread up to 2% of the asset's bottom ask price.