What does the term 'spread' mean in the context of cryptocurrency trading?

1 answers

• Jan 11, 2022 · 3 years ago
  Spread in cryptocurrency trading refers to the difference between the highest bid price and the lowest ask price for a specific cryptocurrency. It represents the market liquidity and the cost of trading. A narrow spread indicates a liquid market with high trading volume, while a wide spread suggests a less liquid market with lower trading volume. The spread can vary across different cryptocurrency exchanges and can change rapidly depending on market conditions. For example, if the highest bid price for Ethereum is $400 and the lowest ask price is $405, the spread would be $5. Traders who want to buy Ethereum would need to pay $405, while those who want to sell would receive $400. It's important for traders to consider the spread when executing trades, as it directly affects the profitability and cost of trading.
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