Bid-Ask Spread and Slippage Explained
The displayed token price is only the starting point. Learn how spread, available liquidity and order size affect what you actually pay, using a simple order book you can calculate yourself.
Spread
The gap between the best buy offer (bid) and best sell offer (ask). It is separate from the exchange’s trading fee.
Liquidity
How much you can buy or sell near the current price. Examine the specific trading pair and venue, not just the token’s market cap or daily volume.
Slippage
The difference between the price you expected and the price your trade achieves. Market movement and your own order’s price impact can both contribute.
Read the gap before you trade
| Best bid | Best ask | Spread |
|---|---|---|
| $0.98 | $1.00 | $0.02 |
Using the midpoint as the reference: midpoint = ($0.98 + $1.00) ÷ 2 = $0.99. Percentage spread = $0.02 ÷ $0.99 × 100 ≈ 2.02%. Other displays may divide by the ask instead, so compare like with like.
Buying at $1.00 and immediately selling at $0.98 would lose $0.02 per token before fees, assuming enough liquidity and unchanged quotes. A narrow spread alone says little about how much volume sits behind it.
Why a 100-token purchase costs more than $100
| Ask price | Tokens | Cost |
|---|---|---|
| $1.00 | 30 | $30.00 |
| $1.02 | 40 | $40.80 |
| $1.05 | 30 | $31.50 |
A market buy for 100 tokens consumes all three levels: $30.00 + $40.80 + $31.50 = $102.30. The weighted average is $102.30 ÷ 100 = $1.023 per token, or 2.3% above the initial $1.00 ask. Trading fees are additional.
This assumes the orders remain available and the venue executes the full order. Live books change; cancellations, competing orders and exchange protections can change the result. Try the same book with a limit order to see the price-versus-fill tradeoff.
Liquidity is specific to your trade
A token can have a large market capitalization but little available buying interest on the exchange you use. Yesterday’s volume does not promise executable orders now. A market maker also takes inventory and execution risk; capturing the spread is not guaranteed profit.
- Inspect depth on the side your order will consume: asks for a buy, bids for a sell.
- Compare the intended amount with available volume across several price levels.
- Check the spread, trading fee and withdrawal cost separately.
- Consider whether you can accept a partial fill or wait for a limit order.
Splitting an order can reduce its immediate size, but it does not guarantee a better total price. Later orders may face a different market, and repeated fees can matter.
What changes on a decentralized exchange?
An automated market maker uses liquidity pools rather than the order book above. The swap changes pool balances, which affects its quote. Slippage tolerance limits how far execution may move from the quoted output; it is not an extra trading fee and does not remove price impact.
Read the minimum received amount, price impact, network fee and route before approving. A failed swap can still consume a network fee. Increasing tolerance simply to force a trade through can permit a worse result. Continue with automated market makers and liquidity pools.
Check the total, not just the headline price
For any platform, compare the actual pair and expected received amount. If you use Binance, inspect its current order book and fee tier. This is an affiliate link; we may earn a commission. The examples here are venue-neutral and do not promise execution.
Sources and further reading
Reviewed 24 October 2026. Examples are hypothetical and exclude fees unless stated. Platform features and supported networks can change.
