Definition
Spread is a trading concept that describes the gap between the best available buy price and the best available sell price for a cryptocurrency at a given moment. The buy price is often called the bid, and the sell price is called the ask. A narrow spread usually indicates more active trading and higher liquidity, while a wide spread suggests less activity or higher uncertainty in pricing.
On a centralized exchange (CEX), the spread is visible in the orderbook as the difference between the highest bid order and the lowest ask order. This difference represents an immediate cost to traders who want to buy or sell instantly, because they must accept the current market prices rather than naming their own.
Context and Usage
Spread matters most when trades are executed with a market order, which fills against the existing orders in the orderbook. A larger spread means a trader effectively pays more to buy or receives less to sell compared with the mid-point between bid and ask. This gap can contribute to slippage, especially in markets with low liquidity or sudden price moves.
Traders who use a limit order try to control the price at which they trade, potentially reducing the impact of the spread if their order is eventually matched. In crypto trading, monitoring spread helps users understand how tight or loose pricing is on a given pair and how efficiently a CEX is matching buyers and sellers at any moment.