Spread = friction
The bid–ask spread is the gap between the best price buyers will pay (bid) and the best price sellers will accept (ask). You "pay" the spread when you cross it to enter/exit.
Why spreads widen
- Low liquidity: Fewer active orders means less competition at each price level.
- News uncertainty: Market makers protect themselves by quoting wider prices.
- Off-hours/transition periods: Opens, closes, lunch breaks (some markets), and extended sessions can be thinner.
Simple rules of thumb
- If the spread looks unusually large, prefer limit orders.
- Avoid "rushing" into the first seconds after an open unless you're trading a specific catalyst.
- When volume is low, reduce size; small trades can move price more than you expect.