Detailed Explanation
How It Works
Tight spread → high liquidity
Wide spread → low liquidity
FAQs
Q: Is a smaller spread better?
Yes, it reduces cost.
Technical Definition
Spread
The spread is the difference between the highest bid and lowest ask price in an order book.
By Crypto University Editorial
Order BookLiquiditySlippage
✦ Key Insight
It represents hidden trading cost and market efficiency.
✕ Common Misconceptions
Ignoring spread on altcoins
Trading during illiquid hours
In Practice
“Bid: $60,000
Ask: $60,050
Spread = $50”
Dig Deeper
Liquidity
Ease of buying/selling an asset without significantly moving its price (high liquidity = tight bid-ask spreads and fast fills).
Order Book
A real-time list of all buy (bids) and sell (asks) orders for a trading pair, showing market depth at different price levels.
Slippage
The difference between the expected price of a trade and the actual executed price, usually due to volatility or low liquidity.
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