Company Name: Sotheby's
Stock Ticker: BID
Industry: Business Services
The Spread is the difference between the Bid price and Ask price on the level two of a stock. This is controlled by Supply and Demand, who is willing to sell at what price and who is willing to buy at what price. Somewhere in the middle of that is the fees from the market makers (but that is a different discussion).
How Spread in the Bid and Ask price should affect your stock trading?
With stock that don’t have much volume, you should really consider the Spread between the bid and the ask price, as if you bought you might pay the Ask price and if you had to sell at market you would have to sell at the Bid price. If the spread between the two is rather large, you could see some significant losses.
Generally with stock that see high volumes have a tighter spread between the ask and the bid prices. When the Spread is tighter it will be less costly to get out of a stock, should you need to get out at market price. Obviously you could put your shares up at a Limit price, but again, the spread and volume might affect the time, it will take to sell the shares.