The bid-ask spread is an indication of market liquidity, giving investors an idea of how easy it is to buy and sell securities.

## Formula

``Bid Ask Spread = Ask Price - Bid Price``

## How do I calculate the bid ask spread?

`In order to calculate the Bid-ask spread, it is important to understand that it represents the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept. The bid-ask spread is a cost associated with trading any financial instrument and is not always apparent to novice investors. To calculate the Bid-ask spread, `one must subtract the bid price from the ask price`. For example, if a seller is asking \$10 and a buyer is bidding \$9, the Bid-ask spread would be \$1. It is important to remember that the Bid-ask spread is a cost associated with trading any financial instrument and should be taken into consideration when trading. Tools such as Sourcetable can be used to help with tracking Bid-ask spread calculations.`

`The bid-ask spread is a measure of market liquidity. It is the difference between the highest price that a buyer is willing to pay for an asset (the bid price) and the lowest price that a seller is willing to accept for the asset (the ask price). `

## What does the bid-ask spread tell us?

`The bid-ask spread tells us how liquid a market is. A smaller spread is an indication of higher liquidity, as it suggests that buyers and sellers are willing to transact closer to the mid-price.`

## What is the formula for calculating the bid-ask spread?

`The formula for calculating the bid-ask spread is `bid-ask spread = ask price - bid price`.`

## Key Points

How do I calculate bid ask spread?
`Bid Ask Spread = Ask Price - Bid Price`