ask price vs bid price

What Are the Ask and Bid Prices?

The ask and bid prices represent two simultaneous quotes for the same asset. The ask price is the lowest price at which a seller is willing to sell, while the bid price is the highest price a buyer is willing to pay. When you place a buy order, you typically transact at the ask price; when you sell, you usually transact at the bid price.

Think of the market as a marketplace: the vendor’s “lowest selling price” is the ask, and the customer’s “highest offer” is the bid. The gap between these two quotes is called the spread, which impacts your trading costs and execution speed.

Why Are Ask and Bid Prices Always Different?

Ask and bid prices differ because buyers and sellers have varying expectations and risk tolerances, and to allow room for market making and order matching. This difference is known as the spread, also referred to as the bid-ask spread.

Several factors drive the spread: First, risk compensation (such as price volatility or inventory risk); second, cost compensation (including capital costs and fees); third, market competition (the more participants, the narrower the spread); and fourth, information and timing (during volatile periods, spreads widen to account for uncertainty).

How Are Ask and Bid Prices Displayed in the Order Book?

Ask and bid prices are clearly shown in the order book (also called the market depth). The order book is a list of open orders arranged by price—buy orders from high to low, sell orders from low to high.

On most exchange interfaces, the buy side displays bids along with their quantities, with the top level showing the highest bid. The sell side shows asks with their corresponding quantities, with the top level reflecting the lowest ask. The gap between these top levels is the current spread.

What Does the Spread Between Ask and Bid Mean?

The spread between ask and bid prices represents an implicit cost for “immediate execution.” A smaller spread indicates better liquidity and more competition, while a wider spread suggests lower liquidity or higher risk.

For example, in BTC/USDT trading on Gate’s spot order book as of December 2025, spreads during active trading hours typically range from 1–5 USDT. During volatile or less active periods, the spread may widen. The actual values fluctuate constantly; always refer to the real-time order book when placing orders.

How Do Ask and Bid Prices Interact With Market Orders and Limit Orders?

Ask and bid prices determine how different order types are executed. A market order is an instruction to “trade instantly at the best available price”—a buy market order will fill at the current ask price, while a sell market order will fill at the current bid. A limit order specifies your desired transaction price and will only execute if the market reaches your limit.

If you prioritize speed and can accept the current spread and possible slippage, a market order is suitable. If you prefer precise control over price and cost, use a limit order—but be prepared to wait for execution.

How Are Ask and Bid Prices Used in Gate Spot Trading?

On Gate’s Spot trading page, ask and bid prices directly determine your execution price. Here’s a step-by-step approach:

Step 1: Open the trading pair page and review the order book. Identify the top “lowest ask” and “highest bid” prices along with their respective order sizes.

Step 2: Choose your order type. Use a market order for instant execution; choose a limit order if you want more control over price.

Step 3: Set your desired price and quantity. For a buy limit order to execute quickly, set your price no lower than the current ask; for a sell limit order, set your price no higher than the current bid.

Step 4: Evaluate slippage and crossing multiple levels risk. If your order size exceeds the available quantity at a given price level, your order will “cross levels” and fill at less favorable prices, incurring extra costs.

Step 5: Calculate total cost. Beyond the ask-bid spread, consider fees. Taker fees (executing against an existing order) are usually higher than maker fees (posting an order on the book), subject to Gate’s specific fee schedule.

Risk Note: Market orders may experience significant slippage during volatility; large orders on low-liquidity pairs can substantially increase trading costs.

What Is the Relationship Between Ask/Bid Prices, Slippage, and Liquidity?

Ask and bid prices serve as indicators for slippage and liquidity. Slippage is the difference between your expected trade price and actual execution price, often seen with market orders or large trades. Liquidity refers to how easily assets can be bought or sold without significantly impacting prices.

When liquidity is high and the order book is deep, spreads are usually tight and slippage on market trades is limited. When liquidity is low, spreads widen, book depth thins out, and market orders are more likely to cross multiple levels—resulting in greater slippage.

How Do Ask and Bid Prices Differ Across Markets?

Ask and bid behavior varies widely across markets. Large-cap cryptocurrencies and mainstream traditional assets (like blue-chip stocks or major forex pairs) usually feature tight spreads. Newly issued tokens, small-cap stocks, or assets traded during off-peak hours often display much wider spreads.

Additionally, market making models impact spread stability. More professional market makers and robust competition lead to narrower spreads; during event-driven or highly volatile periods, wider spreads are common.

What Are Common Misconceptions About Ask and Bid Prices?

One misconception is confusing your buy price with the “bid.” In reality, when you buy, you pay the “ask”; when you sell, you receive the “bid.”

Another misconception is ignoring size and depth. Looking only at the top-level ask and bid isn’t sufficient—your order size may cross multiple levels, causing your average execution price to differ from what you expect.

Some traders also assume that the spread is their only cost. In fact, fees, funding rates (for certain derivatives), and slippage may all contribute significantly to overall trading expenses in addition to the ask-bid spread.

Key Takeaways on Ask and Bid Prices

Ask and bid are two fundamental opposing quotes in any trade: you buy at the ask price and sell at the bid. The difference between them—the spread—reflects liquidity and immediate execution cost. Understanding the order book helps you choose between market or limit orders and manage slippage. On platforms like Gate, it’s prudent to consider both fees and depth when assessing total costs. Always remain aware of volatility, slippage, and liquidity risks when trading funds—and base decisions on real-time order book data.

FAQ

Do Ask and Bid Correspond to Sell Price and Buy Price?

Yes—“ask” refers to the sell price; “bid” refers to the buy price. The ask is the minimum price sellers are willing to accept; the bid is the maximum buyers are willing to pay. These terms frequently appear on exchange interfaces—understanding them helps you interpret market data more quickly.

Why Is My Executed Price Different From What I Saw When Placing My Order?

This typically results from spreads and market volatility. When you place a buy market order, it fills at the current ask; when selling with a market order, it fills at the current bid. If prices are moving rapidly, your execution may differ from what was displayed—this is known as slippage.

How Should Beginners Use Bid/Ask Prices to Place Orders?

If you want fast execution, place a market order—it will fill at the current ask. If you want to control costs, use a limit order near the bid price—but be prepared to wait for execution. Beginners are advised to start with market orders to become familiar with trading workflows before experimenting with limit orders as they gain experience.

What Does a Larger or Smaller Spread Between Bid and Ask Indicate?

The size of the spread reflects market liquidity. A smaller spread means higher liquidity and more active trading; a larger spread means fewer participants and higher transaction costs. On Gate, major cryptocurrencies typically have tight spreads; less popular coins may have much wider spreads.

Are Bid/Ask Prices for the Same Asset Identical Across Different Exchanges?

No—they differ across exchanges based on real-time supply-demand dynamics at each venue. At any given moment, Bitcoin’s bid/ask prices on Gate may differ from those on other exchanges—these discrepancies create arbitrage opportunities for traders.