Investing · General financial education

Bid-ask spread

Buying and selling often have two prices: bid (sell) and ask (buy). The gap between them is a trading cost, on top of TER.

In more detail

In calm, high-turnover hours the spread can be small. In thin markets, outside core hours or in stress it widens. One-off spreads hit you when you trade; TER runs every year. Read them separately.

Background

For ETFs the exchange spread sits on top of the ongoing charge; some funds charge entry or exit loads instead of a visible bid-ask. Illiquid bonds or niche themes can be dearer to trade than the prospectus first suggests. Finmon does not say when you should trade.

An example

A thinly traded bond ETF shows 100.10 to 100.90. A round trip would be about 0.80 on 100, before TER. Figures are a teaching example, not a live quote.

A common misconception

If TER is small, trading costs nothing extra.

Bid-ask, commissions and loads are often extra, and larger in thin markets.

Source: Investor.gov · Understanding fees. Last reviewed: 2026-11-09. Editorially reviewed on 2026-11-09. Next review 2027-11-09. Version 0.2.0. Finmon explains. It does not advise. Not investment, tax or legal advice.