The bid-ask spread is the difference between the price the buyer is willing to pay and the price the seller is willing to accept for some number of shares of a security. For example, if the average bid for stock $XYZ is $5.25, and the average ask is $5.75, then the spread is $5.75 – $5.25 = $0.50. Bid-ask spread is a strong indicator of market liquidity, such that a lower spread indicates higher liquidity.