What does Bid-Ask Spread mean?

The bid is the highest price a buyer will pay right now; the ask is the lowest price a seller will accept. The gap between them is the spread.

The bid is the highest price a buyer will pay right now. The ask is the lowest price a seller will accept. The gap between them is the spread. Tight spreads mean lots of liquidity; wide spreads mean it's harder to trade efficiently.

Bid-Ask Spread example

If the bid is $50.00 and the ask is $50.05, the spread is 5 cents. Buy 100 shares at the ask and sell them straight back at the bid, and you lose $5 even though the price never moved.

Common beginner mistake

Ignoring the spread on thinly traded stocks, where it can be 1–2% of the price — a cost you pay every single time you trade in and out.