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Bid/Ask

Bid-offer spread shows the gap between buy and sell prices.
Bid and ask (also referred to as bid and offer) are the quoted prices at which market participants are willing to buy or sell a financial instrument, commodity, or derivative. The bid price is the highest price a buyer is prepared to pay for an asset, while the ask or offer price is the lowest price at which a seller is willing to sell. The difference between these two prices is known as the bid-offer spread.

The bid-offer spread is a key measure of market liquidity and trading costs. In highly liquid markets with large trading volumes and many participants, spreads are typically narrow because buyers and sellers can transact easily at competitive prices. In less liquid or more volatile markets, spreads tend to widen as market makers and traders demand greater compensation for risk and uncertainty.

In commodity and energy trading, bid and ask prices provide an indication of current market sentiment and supply-demand conditions. Traders, brokers, and exchanges continuously update these prices throughout the trading day as market conditions change. The spread also represents an implicit transaction cost, since a participant buying at the ask price and immediately selling at the bid price would incur the difference as a loss.

Bid-offer spreads are widely monitored by traders, risk managers, and analysts because they reflect market efficiency, liquidity conditions, and the cost of entering or exiting positions. Wider spreads may occur during periods of market stress, low trading activity, or significant price volatility, while tighter spreads generally indicate stable and efficient market conditions.