Spread

Spread

Definition

The spread is the difference between the best ask and the best bid. In a CLOB like Polymarket's, the best ask is the lowest price someone is willing to sell an outcome for, and the best bid is the highest price someone is willing to buy it for. The numeric gap between those two quotes is the spread.

In context

You encounter the spread every time you look at an order book or the best-bid-ask feed. On Polymarket a wide spread usually signals thin liquidity: there are few resting orders near the midpoint, so crossing the book to execute a trade will move price and increase your execution cost. Tight spreads mean smaller immediate slippage and lower explicit execution cost for small-to-moderate orders.

Because binary and multi-outcome markets must sum to $1.00 at fair value, spreads on individual outcomes also affect the arithmetic of intra-market arbitrage. For example, in a binary market a persistent, symmetric spread makes it harder for an arbitrageur to buy both legs and lock in an edge, because you pay the asks that include those spreads.

Practical notes

• Spread size is not a statement about the correctness of market probability; it's a liquidity metric and an immediate execution cost.
• Tick size changes (e.g. $0.01 versus $0.001 near price extremes) can discretise spreads and create step changes in measurable spread.
• Maker fees are zero on Polymarket, so narrow spreads can be earned by passive liquidity provision; taker fees (variable by category) increase the effective cost of crossing the spread.

See also

• /glossary/midpoint — the midpoint is the average of best bid and best ask and is commonly used as a reference price.
• /glossary/clob — the Central Limit Order Book is the matching engine that produces the bid, ask, and spread.