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Glossary · PSX term

Bid-ask spread.

The bid-ask spread is the gap between the highest price buyers offer and the lowest price sellers ask.

Definition

A narrow spread signals a liquid, actively traded stock, while a wide spread points to low liquidity and higher trading cost. You effectively pay the spread when you buy at the ask and sell at the bid.

Worked example

If buyers bid Rs. 99 and sellers ask Rs. 101, the bid-ask spread is Rs. 2.

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