Bid-Ask Spread — How Market Makers Profit
The spread is the gap between the bid (buy) and ask (sell) price. A wide spread means low liquidity and a higher hidden cost every time you trade.
Bid, ask, and the spread
- Bid — the price a buyer (often a market maker) is willing to pay.
- Ask — the price a seller is willing to accept.
If the bid is 70,000 and the ask is 70,010, the spread is 10. A market maker who buys at the bid and sells at the ask earns that 10. When you buy at the ask and later sell at the bid, that same 10 is your cost.
A wide spread means low liquidity
- BTC/USDT: bid 70,000, ask 70,001 — spread of 1, very liquid.
- A thin altcoin: bid 0.100, ask 0.150 — a 50% spread, illiquid.
The fewer people trading a pair, the wider the spread, and the more it costs you to get in and out.
The hidden cost
If you buy and sell the same day, you pay the spread twice over: buy at the ask, sell at the bid. On illiquid pairs that alone can outweigh any small move you were trying to catch.
How to reduce the impact
- Trade liquid pairs (BTC, ETH) where the spread is 1–2 ticks.
- Use limit orders inside the spread. With a bid of 70,000 and ask of 70,010, a limit at 70,005 fills at a better price if it executes.
- Be wary of very small coins, where a wide spread can put you underwater the moment you buy.
Maker vs taker fees
Many exchanges also charge different fees: a lower maker fee for resting limit orders and a higher taker fee for market orders that fill immediately. Your true cost is spread plus fees, so limit orders on liquid pairs are usually the cheapest way in.
fastbot supports limit orders across Binance, DNSE and eToro, so you can control your entry price instead of always paying the spread. Try it.