what is an example of a bid ask spread in stocks 
consider the following example where a trader is looking to purchase 100 shares of apple for 50 the trader sees that 100 shares are being offered at 50 05 in the market here the spread would be 50 00 50 05 or 0 05 wide while this spread may seem small or insignificant on large trades it can create a meaningful difference which is why narrow spreads are typically more ideal the total value of the bid ask spread in this instance would be equal to 100 shares x 0 05 or 5 the bottom linethe bid ask spread serves as an effective measure of liqudity as more liquid securities will have small spreads while illiquid ones will have larger ones investors should keep an eye on the spread of any security they wish to buy or sell to get a sense for how frequently it trades and to decide on the type of order to use when making a transaction correction dec 4 2022 this article s question and answer segment was edited from a previous version that incorrectly defined bid ask spread 