What is the bid-ask spread?

A stock 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.

JagSim does not show a bid or an ask and has no spread: every order fills at the last traded price, with no fee. The cost this page describes therefore does not appear in your JagSim results, and a real account would usually fill slightly worse than JagSim does. How trading works on JagSim.

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. Knowing it is there helps you see why flipping in and out of wide-spread names can quietly chip away at results in a real account.

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.

Why do I lose a little the instant I buy and then sell?

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. JagSim fills at the last traded price with no spread, so you will not see this cost there.

Do all stocks have the same spread?

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.

Is the spread a fee my broker charges?

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.