Definition
In this context, spread means best ask minus best bid. The ask is the price an immediate buyer faces; the bid is what an immediate seller can accept. This gap is distinct from an explicit trading commission and from a spread between two different instruments.
How It Works
With a hypothetical best bid of 99 USDT and ask of 101, the absolute spread is 2 USDT. Relative to the midpoint of 100, it is 2%. Other percentage conventions can use different denominators, so the formula should accompany comparisons.
Key Considerations
A wider spread generally makes an immediate buy-and-sell round trip more costly, even before fees. A narrow spread alone does not prove deep liquidity because only small quantities may be available at those quotes. Spreads can widen suddenly during volatility or when market makers withdraw.