Understanding Spread: The Basic Concept Every Trader Needs to Know

Spread is a familiar term in the world of financial trading, but many people still do not fully understand its meaning. Simply put, spread is the difference between the bid price (the price buyers offer) and the ask price (the price sellers propose).

How Does Spread Work in Practice?

To visualize, imagine you are participating in a marketplace:

• A buyer says: “I want to buy apples at 90 rubles!”
• A seller responds: “I only sell at 100 rubles!”
• The 10 ruble gap between these two prices is the spread.

Similarly, in the cryptocurrency market, when you want to trade XRP or BNB, there is always a difference between the price you are willing to buy (bid) and the price others are willing to sell (ask). This gap is the hidden cost you have to bear.

Why Is Spread Important?

Small spread = Easier trading When the spread is narrow, you can quickly find a trading partner. This indicates high liquidity for the asset, such as major trading pairs: XRP, BNB, ORDI. You can enter and exit positions without incurring too many costs.

Large spread = Higher hidden risk Conversely, when the difference between buy and sell prices widens, it signals low liquidity. You will have difficulty finding sellers or buyers, leading to unusual price volatility and potential losses.

Where Does Spread Appear?

Spread is not only present in the cryptocurrency market. It also exists in:

• Stock Market: Between the bid and ask prices of each stock
• Forex Market: Currency pairs always have their own spread
• Cryptocurrency Exchanges: Service providers profit from this spread

Wherever it appears, spread is the main profit for trading service providers, serving as a natural market mechanism to sustain exchange operations.

Current Data:

• XRP: 1.9185 USDT (-2.79%)
• BNB: 864.95 USDT (-2.65%)
• ORDI: 4.629 USDT (-0.15%)