Bid and asked is a two-way price quotation.The bid price is the highest amount a buyer is willing to pay for a security. The asked price is the lowest amount the seller is willing to accept. When the two agree on a price, the trade occurs. The difference between the bid and asked prices is the spread. The smaller the spread, the more liquid the asset is. Bid-ask spreads vary widely. Blue-chip stocks generally have smaller spreads, while the spreads on small-caps are wider. Investors pay the ask price when they buy a security, and receive the bid when they sell. Suppose the current quotation for ABC Stock is $10.50/$10.55. John the investor who wants to buy the stock will pay the asked price of $10.55. Jane will receive the bid price of $10.50 when she sells it. The spread works to a market maker’s advantage. A market maker is willing to buy ABC for the bid price of $10.50 because he can sell it at the asked price of $10.55. The spread is profit.