What is a spread in finance?

For investors, you typically look at the spread when you are finding what stock to purchase.

The spread is the difference two prices, rates, or yields.

The common spread component that traders comb through is the bid-ask spread. The gap refers to the bid price from buyers and the price ask from sellers.

This is important because traders with lower spreads will endure fewer operating costs and higher long-term savings. On the other hand, investors competing with higher spreads will need to put forward higher profits to offset the cost.