Bid-Ask Spread

At any moment a market has two prices: the bid (best resting buy) and the ask (best resting sell). The spread is the difference, and the mid-price sits between them:

spread = ask − bid
mid    = (ask + bid) / 2

If BTC is 63,999.5 bid / 64,000.5 ask, the spread is $1, about 1.6 basis points of the mid.

Why it's a cost

A round trip executed with market orders buys at the ask and sells at the bid: you lose one full spread before the market moves at all. Tight-spread markets like the major crypto pairs make active trading feasible. Wide-spread markets quietly consume high-frequency edges, one round trip at a time.

Spread as a signal

The spread is also a live gauge of liquidity and stress. It widens when volatility spikes and market makers step back, which means backtests calibrated on calm-market spreads under-charge exactly the moments a strategy is most likely to be trading.

On AlphaProve

The simulated exchange charges a configurable spread in basis points on every fill, alongside separate taker/maker fee and market-slippage rates, so the net PnL on your tearsheet already has one round-trip spread subtracted per trade before you read it. Because that spread is a flat input you control, you can raise it to check whether a high-frequency system still clears its own execution cost, or set it toward the tight quotes the major perps actually run.