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The glossary
Bid offer spread

There often exists a gap between the price at which a sellers are willing to sell an asset and the price at which a buyers are willing to buy it, this spread is referred to as the bid offer spread.

Anecdote

When the market conditions are deteriorating and the liquidity is reduced, bid-offer spreads tend to widen.

Alternative definition

It is the difference between the Bid price and the Ask price. It is expressed in PIPs (PIP is usually the 4th decimal number, sometimes the 2nd depending on the instrument) 1PIP = 1 basic point.

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