Bid-Offer Spread

The difference between the buying price (bid) and selling (offer) price of a currency or financial instrument.

A bid-offer spread is representative of the difference between the highest price an investor (buyer) is willing to bid for a security and the lowest a seller is prepared to take.

The price of a security goes up when there are more buyers in the market than sellers and vice versa.

Investors must be aware of bid-offer spreads because it is often a forgotten cost when trading any financial instrument.