The bid-ask spread is the gap between the highest price buyers will pay (the bid) and the lowest price sellers will accept (the ask). You generally buy at the ask and sell at the bid, so the spread is a small hidden cost of trading. Popular, heavily traded stocks tend to have tighter spreads.
AAPL shows a bid of $99.98 and an ask of $100.02, a $0.04 spread. Buy at $100.02 with a market order and sell instantly at $99.98, and you're down $0.04 per share before the price even moves. On thinly traded stocks that gap can be much wider, which is one reason a limit order can help you control your entry price.
The spread is a cost most beginners never notice because it doesn't show up as a line-item fee. Every time you buy at the ask and sell at the bid, you start a hair behind, and on thinly traded names that gap can widen fast. Spreads tend to be tightest on popular, high-volume stocks and a bit wider around the open, the close, and on small companies. Getting a feel for it on a paper simulator helps you see why flipping in and out of wide-spread names can quietly chip away at results.
Treating the last price as your price. The number on the ticker is the last trade, not what you'll pay next. You typically buy a little above it and sell a little below it, and the difference is the spread.
Ignoring spreads on thin stocks. A small or lightly traded stock can have a spread many times wider than a big name, so a quick round trip can cost far more than you'd guess from the price alone.
Trading in and out too often. Every round trip crosses the spread again. Frequent flipping tends to add up, even when each individual gap looks tiny.
Because you generally buy at the ask and sell at the bid, and the spread between them is the gap you cross on a round trip. On a paper simulator you can watch this happen with no real money at stake.
No. Heavily traded stocks tend to have very tight spreads, while small or lightly traded ones can have much wider gaps. Spreads also tend to widen near the open and close.
Not exactly. It's the difference between the best available buy and sell prices in the market itself, so it acts as a cost of trading rather than a separate commission.
Last updated: July 2026
Educational only. Not investment advice. JagSim is a simulator, not a broker.