In stock-market trading, the difference between the highest buying price and lowest selling price is called the bid-ask spread.
The bid is the highest price a buyer currently offers, while the ask is the lowest price at which a seller is willing to sell. The spread is calculated by subtracting the bid from the ask. For example, if a stock has a bid of $49 and an ask of $50, its spread is $1.
Spreads vary with liquidity, trading activity, volatility, and market conditions. Highly traded stocks often have narrow spreads because many buyers and sellers are competing. Less liquid securities may have wider spreads, increasing the cost of immediately buying and selling.
The spread is not the same as a trading commission. It is a market price difference that can affect execution: an investor buying immediately generally pays the ask, while an investor selling immediately generally receives the bid. Limit orders can instead specify a maximum purchase price or minimum selling price.