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Day Trading
Trade FrequencyProfit and RisksHistoryFinancial SettlementElectronic Communication NetworksTechniquesTrend followingContrarianRange tradingScalpingRebate TradingNews PlayingTrading EquipmentBrokerageCommissionSpreadMarket DataRegulations and restrictions
Trade FrequencyProfit and RisksHistoryFinancial SettlementElectronic Communication NetworksTechniquesTrend followingContrarianRange tradingScalpingRebate TradingNews PlayingTrading EquipmentBrokerageCommissionSpreadMarket DataRegulations and restrictions
Spread
The numerical difference between the bid and ask prices is referred to as the bid-ask spread. Most worldwide markets operate on a bid-ask-based system.The '''ask''' prices are immediate execution (market) prices for '''quick buyers''' (ask takers) while '''bid''' prices are for '''quick sellers''' (bid takers). If a trade is executed at quoted prices, closing the trade immediately without queuing would not cause a loss because the bid price is always less than the ask price at any point in time.
The bid-ask spread is two sides of the same coin. The spread can be viewed as trading bonuses or costs according to different parties and different strategies. On one hand, traders who do NOT wish to queue their order, instead paying the market price, pay the spreads (costs). On the other hand, traders who wish to queue and wait for execution receive the spreads (bonuses). Some day trading strategies attempt to capture the spread as additional, or even the only, profits for successful trades.