Learn the stock market › How to trade on the exchange › Lesson 2 of 6
Bid, ask and the spread
Two prices at once
A stock does not have one price but two: what buyers bid and what sellers ask. The price in a quote list is usually the last trade, and the next trade may be something else.
The words are easy to mix up. The bid is what you get when you sell at once, because it is what buyers pay. The ask is what you pay when you buy at once. The order book shows both on its top row.
What the spread costs
If you buy at the ask and sell at the bid, you pay the whole spread once. The price here is Visa's close on Nov 6, 2026. The spreads are examples of different widths. They are not Visa's own quotes, because a spread changes from moment to moment.
| Spread | Of the price | Buying and selling 100 shares at once |
|---|---|---|
| $0.01 | 0.002% | $1.00 |
| $0.05 | 0.012% | $5.00 |
| $0.25 | 0.059% | $25.00 |
| $1.00 | 0.237% | $100.00 |
The cost is on no confirmation, but it is in the price. It comes on top of any commission.
When the spread gets wider
The spread is usually small in large companies that many people trade, and wider in small ones with more time between trades. It also tends to widen when news makes a stock's value unclear, right after the open, and outside regular hours. In a thinly traded stock the spread can easily be the largest cost.
You do not always have to pay it. With a limit order you can join the bid and wait, but then you may not get a trade at all.
Test yourself
The bid is $49.60 and the ask is $49.65. You buy 100 shares and sell them at once. What does the spread cost you?
How the stock has moved: Why did Visa move?