What is a spread in simple terms?
A spread is the difference between the highest price someone is willing to buy an asset (bid) and the lowest price someone wants to sell it for (ask).
How does it work?
🔵 Imagine you are at a market:
— Buyers say: "I’m willing to buy an apple for 90 rubles!"
— Sellers reply: "I’m ready to sell it for 100 rubles!"
— The difference between 90 and 100 rubles is the spread (10 rubles).
🔵 Why is the spread important?
— The smaller the spread, the easier and faster trades happen, meaning the asset is liquid.
— The larger the spread, the harder it is to find buyers or sellers, which can cause sharp price movements.
🔵 Where can you find a spread?
Spreads exist in stock, forex, and crypto markets, as well as in exchange services, where the difference between buying and selling rates is their profit.