Glossary
What is the bid-ask spread?
Also called: spread, bid/ask spread, bid-offer spread
Updated Ninja Terminal team
Definition
The bid-ask spread is the difference between the highest price buyers offer (the bid) and the lowest price sellers ask (the ask) in an order book. A narrow spread signals a liquid market. A wide spread means that a market order costs more, because you buy at the ask and sell at the bid.
The spread is the smallest cost you pay for immediate execution. It sits between the two prices of the best bid and offer.
How is it measured?
spread = best ask - best bid
spread in basis points = spread / mid price x 10,000
Example: bid 59,995, ask 60,005. The spread is 10 USD. The mid price is 60,000, so the spread is about 1.7 basis points (0.017%).
If you buy with a market order and sell right away, you lose about the spread, plus fees and any slippage.
What makes the spread wide or narrow?
- Liquidity: active markets have many orders near the price and tight spreads. Small-cap or newly listed coins can have wide spreads.
- Volatility: market makers widen quotes when price moves fast.
- Time of day: thin hours can widen spreads.
How can you trade around it?
Use a limit order inside the spread to avoid paying it, and consider post-only to make sure you add liquidity. You earn the maker side in maker and taker fees, but the order may not fill.
Where does it appear in Ninja Terminal?
The order book shows the spread, and alerts can fire when the spread goes above or below a level in basis points, per exchange, market, and symbol.
Frequently asked questions
What is a good bid-ask spread?
A smaller spread is better for taking liquidity. What counts as small depends on the market. Major pairs usually trade at a tiny fraction of a percent.
Does the spread differ between exchanges?
Yes. Each exchange has its own order book, so the spread for the same coin can differ between venues and between spot and perpetual markets.