Bid-Ask Spread
The bid-ask spread is the gap between the best bid and the best offer — the round-trip tax of crossing the book.
Definition
Bid-Ask Spread refers to ask spread is the gap between the best bid and the best offer — the round-trip tax of crossing the book. Keep that definition fixed when comparing series, managers, or regimes — renaming the same tape does not create a new signal.
Why it matters
Price formation at the venue layer decides whether a signal survives implementation. When ask spread is the gap between the best bid and the best offer — the round-trip tax of crossing the book shifts, related hedges, limits, and narratives usually need an explicit update rather than a quiet assumption.
Case
Suppose a desk is positioned for the opposite of what bid-ask spread is saying. If ask spread is the gap between the best bid and the best offer — the round-trip tax of crossing the book moves against that book, the first question is not “is the story clever?” but whether size, hedges, and stop logic still match the observation.
How to read it
Measure spread, queue, and impact at your size; paper fills are not a desk edge. Prefer a short written null hypothesis for Bid-Ask Spread: what would falsify the current reading in the next window?