## Hello All of you my dear friends today am here for the professor @awesononso. So let's start the post. ![20210911_191126.jpg](https://cdn.steemitimages.com/DQmWhuFer64eYAeBo64WviFjfs1Xxssyt41KXcGMfStuqRJ/20210911_191126.jpg) *** ## Bid-Ask Spread. *** As we all must have visited the market at some point. And we must have heard the Bid-Ask Spread there. It is dealing which is placed between two parties, one is a buyer and willing to pay money for an asset and the second is a seller who is willing to selling his asset at its particular price. So here we talk about the Bi-Ask spread so first o all I describe the Bid price. ### Bid Price It is a price of an item is the highest price which a buyer is ready to pay for this material. The bid price is always lowered than the Ask price. ## Ask Price The Ask price is the lowest price for which a seller is ready to sell the item. The Ask price is always higher than the Bid Price. ![Screenshot_20210911-194251.png](https://cdn.steemitimages.com/DQmUmNctFE9xEFtiYYw1rc5SBpDu8xBfzRQ3YjthR3JUMy1/Screenshot_20210911-194251.png) We can simply say that Bid-Ask spread is a difference between the bid and ask price of an item or commodity. We can write it mathematically; Bid-Ask Spread = Ask price - Bid price If we talk about the daily life example then we can talk about it this way, A shopkeeper of an optical center have lenses and glasses and he wants to sell the glasses for 5$ per pair of glasses then this become an Ask price of Glasses. And suppose the customer comes and wants to buy the glasses at 4.5$ so this becomes the Bid price. So in the Mathematical form; Bid-Ask Spread = Ask Price - Bid Price Bid-Ask Spread = 5$-4.5$ Bid-Ask Spread = 0.5$ ![100.png](https://cdn.steemitimages.com/DQmUMr7VUk3gPSmua9DDqCfudNVEyuNMX25tcqPPCwxPeDC/100.png) *** ## Why is the Bid-Ask Spread important in a market? ***

The Bid-Ask Spread is a very important Barometer of liquidity for any exchange platform. As the liquidity of the stocks improves the prices are also safely determined. So it is very helpful for any trader because it helps the traders to determine the fluctuations in the market. As I have told you before that the Bid-Ask Spread is actually the gap between the Ask Price and the Bid Price of a specific crypto asset. As it is well known that the market of cryptocurrency is so volatile that it is necessary for the traders to overcome these fluctuations properly if they want to get profit. So, the Bid-Ask Spread is a helpful thing in this regard because it is used to determine the liquidity of the market. Liquidity of the market is the ability of the market to execute the transactions made on the blockchain as soon as possible. The more liquidity, the more will be the transactions are easy to fulfill. So, the Spread is the determining factor of liquidity. The Spread is inversely proportional to the liquidity. The more will be the gap between bid and ask price, the more time-consuming it is to execute the transactions. So, the Bid-Ask Spread plays a very important role in liquidity of the market and hence it helps the traders to determine that whether the selected market is suitable for them to trade, or not.

![100.png](https://cdn.steemitimages.com/DQmUMr7VUk3gPSmua9DDqCfudNVEyuNMX25tcqPPCwxPeDC/100.png) *** ## If Crypto X has a bid price of $5 and an ask price of $5.20,
a.) Calculate the Bid-Ask spread.
b.) Calculate the Bid-Ask spread in percentage *** The professor gives us the data for analyzing; ### Data: Bid Price of Crypto B = $5 Ask Price of Crypto B = $5.20 The professor wants to find the following: 1) Bid-Ask Spread percentage 2) Bid-Ask Spread ### Solution #### (a) Bid-Ask Spread (percentage):
= (Spread/Ask) x 100 = (0.20/5.20) x 100 = (0.384) x 100 = 3.84% #### (a). Bid-Ask Spread:
= Ask Price - Bid Price = 5.20-5 = 0.20 ## As a Result The *Bid-Ask Spread Percentage* is **3.84%**.
The *Bid-Ask Spread* is **0.20$**. *So this is very easy because the whole lecture of the professor is very interesting and easy to analyze.* ![100.png](https://cdn.steemitimages.com/DQmUMr7VUk3gPSmua9DDqCfudNVEyuNMX25tcqPPCwxPeDC/100.png) ## If Crypto Y has a bid price of $8.40 and an ask price of $8.80
a.) Calculate the Bid-Ask spread
b.) Calculate the Bid-Ask spread in percentage ## Data: Bid Price of Crypto C = $8.40 Ask Price of Crypto C = $8.80 Here we simply find the following things: a) Bid-Ask Spread b) Bid-Ask Spread percentage ## Solution a) Bid-Ask Spread: = Ask Price - Bid Price = 8.80 - 8.40 = 0.40 b) Bid-ask Spread(percentages): = (Spread/Ask Price) x 100 = (0.40/8.80) x 100 = 0.4545 x 100 = 4.54% ![100.png](https://cdn.steemitimages.com/DQmUMr7VUk3gPSmua9DDqCfudNVEyuNMX25tcqPPCwxPeDC/100.png) *** ## In one statement, which of the assets above has the higher liquidity and why? *** Simply if we see the above data then we can easily determine that Crypto B has a higher Liquidity than the Crypto C asset. As the liquidity is based upon the Bid-ask spread so the asset Crypto b is small to the crypto C asset. ![100.png](https://cdn.steemitimages.com/DQmUMr7VUk3gPSmua9DDqCfudNVEyuNMX25tcqPPCwxPeDC/100.png) *** ## Slippage *** Slippage is a process which appers in the exchange market of cryptocurrencies caused by the volatility of assets. It is a market order which provides the traders to tradeat the existing price of cryptocurrencies. There is a small time between the placed order and execute. So this time show all the things which appear during this time. Crypto currencies are volatile assets that change their value in a very short time. ![Zskj9C56UonWToSX8tGXNY8jeXKSedJ2aRhGRj6HDecqrfXW7ZYvQrN6Pc2uixsVZTqhNiaEZrEFWbzwYaoXpznvUGWGWEDiBwo25XV3NGY1AQckHjPt.png](https://cdn.steemitimages.com/DQmUMr7VUk3gPSmua9DDqCfudNVEyuNMX25tcqPPCwxPeDC/Zskj9C56UonWToSX8tGXNY8jeXKSedJ2aRhGRj6HDecqrfXW7ZYvQrN6Pc2uixsVZTqhNiaEZrEFWbzwYaoXpznvUGWGWEDiBwo25XV3NGY1AQckHjPt.png) ## Explain Positive Slippage and Negative slippage with price illustrations for each. So here we talk about the Negative and Positive Slippage so let's start: ## Positive Slippage Positive Slippage is a change of price of an asset during the placement of the order and between the trade. So this is in the favour of the loss of the trader. If the change is in the favour of the price then it said to be Positive Slippage. ## Negative Slippage It is opposite of the positive Slippage we can simply said that If the change is not in favour of the price then it said to be Negative Slippage. *** ## Conclusion *** *This is really very good lecture by the dear professor @awesononso. In this post I learn a lot about the Bid-Ask,percentage and liquidity. So totally I enjoy this lecture. Professor teachs about the importance of Bid-Ask Spread.* ## Special Mention @awesononso