Bid, ask, and spread explained
Bid, ask, and spread are the three numbers every event-contract trader should read before placing an order. They tell you the actual price you can trade at, how much the venue or other traders are charging you to take the other side, and how liquid the market really is.
Bid, ask, and spread explained
Bid: the best price to sell at
The bid is the highest price any buyer is currently willing to pay for a share. If the best bid on a YES contract is $0.54, that means the most aggressive buyer is offering 54¢. If you want to sell YES immediately, you'll get 54¢ per share (minus fees).
Ask: the best price to buy at
The ask (also called the offer) is the lowest price any seller is currently willing to accept. If the best ask on the same YES contract is $0.57, that means the cheapest offer is 57¢. If you want to buy YES immediately, you'll pay 57¢ per share.
Spread: the cost of immediacy
The spread is the difference between the bid and the ask. In this example, $0.57 − $0.54 = $0.03, or three cents. That's the implicit cost of trading in and out of the market instantly. Tight spreads (one cent or less) indicate a liquid, well-arbitraged market. Wide spreads (five cents or more) indicate thin liquidity and usually mean the implied probability reading is noisier than it looks. A worked example: if you buy 100 YES shares at $0.57 and immediately sell them at $0.54, you lose $3.00 just on the round-trip, before any move in the underlying probability. That's why event-contract traders wait for tight spreads before trading size.
Guias Relacionados nesta Série
O que é probabilidade implícita?
O conceito mais importante nos mercados de previsão: como o preço de uma ação se torna uma estimativa de probabilidade: e quando essa leitura falha.
SérieLivro de Ordens vs AMM: como são definidos os preços?
Os dois mecanismos principais que os mercados de previsão usam para combinar compradores e vendedores: e como cada um molda spreads e liquidez.
SérieO que é o LMSR?
A Logarithmic Market Scoring Rule explicada: por que sempre fornece uma cotação, como funciona a função de custo e quem ainda a usa.