Two sides of the market
The trading spread connects two sides of opposing offers. It should not be confused with a credit spread on yield or a contractual coupon premium. The SEC explains bid–ask spread as a separate cost factor when buying and selling an exchange-traded fund.[5](#source-cm-etf) It may not appear as a separate commission line: the difference is embedded in the terms available to the two sides of the book.
How to interpret the number
For a relative measure, state the denominator: the midpoint, bid or ask. Also state the time and available volume. Even unchanged best prices do not promise the same average price for a large position. The last trade is a different value and does not guarantee execution.[4](#source-cm-orders) A narrow spread does not prove issuer reliability or limited risk. The [order book](/guides/order-book-bid-ask/) and [liquidity depth](/guides/liquidity-depth-price-impact/) examine this difference using their own arithmetic.