Why spreads widen during volatility 📊

  • #AllianceTrade
  • #MarketInsight
  • #Spreads
  • #Volatility
  • #TradingBasics
  • #FinancialMarkets

Les articles sont publiés en anglais.

Why spreads widen during volatility 📊

A spread is the difference between the bid and ask price.

Bid is the highest price a buyer is currently willing to pay.

Ask is the lowest price a seller is currently willing to accept.

The gap between them is called the spread.

↗️ During calmer market conditions, that gap is often relatively tight. But when volatility rises, liquidity can become thinner and prices may change more quickly.

As a result, the distance between bid and ask can widen.

That matters because a wider spread can affect entry and exit prices, especially during fast market moves.

Understanding spread behavior helps you better read trading conditions, not just price direction.

More volatility can mean a wider gap between buyers and sellers.

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