What is Spread?
The spread is the gap between the highest price a buyer will pay and the lowest price a seller will accept, and it is a cost paid on every round trip.
What does Spread mean in practice?
Buyers bid and sellers ask at slightly different prices. A market order buys at the ask and sells at the bid, so entering and immediately exiting costs the whole spread even if price never moves.
Spreads widen when liquidity is thin or volatility is high, often at exactly the moment a stop is triggered. That makes the spread part of your real cost and a reason tight stops can be expensive: a stop placed inside the typical spread is taken out by the gap itself.
A worked example
Illustrative only: bid 99.95, ask 100.05. Buying and selling straight away at market costs 0.10 per unit before fees, regardless of any price move.
How to read or test it
Check the live spread at the times you intend to trade rather than the quoted typical one. It is usually narrowest in the busiest hours and widens around news, at the open and in thin overnight periods. Compare the spread with the size of your stop and your target: if the spread is a meaningful fraction of either, the trade is partly decided before price moves. Test the strategy with a spread assumption wide enough to be uncomfortable.
How AKQX handles Spread
AKQX's cost estimates in backtests and paper trading cover fees and slippage, and a minimum stop distance and a fee-to-risk breaker guard against setups where trading cost is large next to the risk taken.
See Risk management tools for the feature page.
A common mistake
Placing a stop so close that normal spread movement triggers it.
Educational only. This entry explains a term. It is not investment advice and does not recommend any trade, setting or strategy, and example numbers are illustrative, not results.
Related terms
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