Data StoreLive· Updated daily
Log inSign up
Definition

What is Spread?

The spread is the gap between the highest price a buyer will pay and the lowest a seller will accept. It is the immediate cost of trading now rather than waiting: a taker crosses it, a maker collects it. On thin prediction markets the spread is often the largest single cost in a strategy.

Also called: bid-ask spread

Why it matters

Spread is not constant. It widens around scheduled events, around the close of a short-cycle market, and whenever makers pull quotes because they suspect informed flow. A backtest that assumes a fixed spread will systematically overstate the profitability of anything that trades at those moments.

The common mistake

Backtesting with a single fixed spread. Spreads widen at precisely the moments most strategies want to trade — around events and near a cycle close — so a flat assumption flatters exactly the trades that are hardest to do.

Related terms

Where this comes up

More

Browse the full glossary (32 terms), the strategy database, or the build guides.

Join Discord