๐ฑ Bid-Ask Spread Calculator
The ask price should be equal to or greater than the bid price.
Enter a bid price and an ask price to calculate the spread's absolute value, its percentage of the ask price, and the midpoint (average of bid and ask). Useful as a rough gauge of trading cost in markets with a bid-ask spread, such as forex, stocks, or crypto.
How to use
- Enter the bid price.
- Enter the ask price.
- The spread's absolute value, percentage, and midpoint are calculated automatically.
How the calculation works
The bid is the highest price a buyer is currently willing to pay, and the ask is the lowest price a seller is willing to accept. If you buy immediately you pay the ask; if you sell immediately you receive the bid. The difference, the spread, is effectively a cost on every trade. Spread = ask โ bid Spread (%) = (ask โ bid) รท ask ร 100 Midpoint = (bid + ask) รท 2 A narrow spread means the stock or currency is actively traded (highly liquid) and cheap to trade.
Worked example
Bid 99, ask 101 Spread: 101 โ 99 = 2 Spread %: 2 รท 101 ร 100 โ 1.98% Midpoint: 100 Buying and immediately selling loses 2 (about 2%) even if the price does not move. USD/JPY example Bid ยฅ150.00, ask ยฅ150.02 โ spread ยฅ0.02 (2 sen)
Things to be aware of
- Spread percentage is sometimes calculated against the midpoint rather than the ask. Use the same method when comparing.
- When trading is thin (early morning, or around major economic releases), spreads can widen sharply for a while.
- Even "commission-free" trading has the spread as a real cost.
FAQ
What are bid and ask?
The bid is the price buyers are offering to pay; the ask is the price sellers are asking for. The ask is normally higher than the bid, and the difference is the spread.
How is the spread calculated?
Spread (absolute) = ask โ bid. Spread (%) = (ask โ bid) รท ask ร 100. A smaller spread generally indicates a more liquid market with lower trading costs.
What is the midpoint?
The simple average of the bid and ask ((bid + ask) รท 2), sometimes used as a rough estimate of the "fair" market price at that moment.