TRADING & AMMS
Bid-Ask Spread
Definition
The bid-ask spread is the difference between the highest price buyers are willing to pay (bid) and the lowest price sellers are willing to accept (ask). Tighter spreads indicate better liquidity.
Example
Example
If ETH has a $1999 bid and $2001 ask, the spread is $2. AMMs don't have traditional spreads but have equivalent trading costs.
Risks to Consider
Risks
- Wide spreads increase costs
- Low liquidity
- Market inefficiency