How and Why the Bid-Ask Spread Changes When Trading

On trading exchanges, every market buy and sell settles according to the bid-ask spread – the difference between the highest price a buyer will pay (the bid) and the lowest price a seller will accept (the ask). Limit orders execute at the specified price or better, although execution isn’t guaranteed. Market orders, meanwhile, can be affected by slippage – the difference between the expected price and the actual execution price – which can be substantial in fast-moving markets. The spread...

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