# Bid-ask spread

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Canonical: https://novigapi.com/learn/bid-ask-spread

The bid-ask spread is the gap between the highest price a buyer will pay and the lowest price a seller will accept on the same outcome.

```
spread_yes = ask_yes - bid_yes = (1 - bid_no) - bid_yes
```

The bid-ask spread is the cost of trading immediately. The bid is the best price someone will buy at; the ask is the best price someone will sell at. If you buy at the ask and sell straight back at the bid, you lose the spread. A narrow spread means a liquid, competitive market where the quoted price is trustworthy. A wide spread means few traders, more uncertainty, or a market that has just moved.

## How it works

On an exchange the spread is set by traders, not by a house. Makers post bids and offers; the spread is whatever gap is left between the best of them. Spreads narrow when many makers compete and widen when news is pending, when a game goes live, or when a market is new. The midpoint of the bid and ask is the usual estimate of the fair price, and half the spread is the cost of crossing from the midpoint to trade now.

## On Novig

Novig's book holds bids only, so the spread comes from both bid sides. The Yes ask is 1 minus the best No bid. A Yes bid of 55% and a No bid of 42% make a Yes ask of 58%, a spread of 3 points. Prices are shown as percentages, so the spread reads directly in points of probability. On live game markets the taker also pays 0.06 x P x (1 - P) per contract, per [Novig trading fees](https://docs.novig.com/api/concepts/fees) (checked 12 Nov 2026), so the full cost of crossing is half the spread plus the fee.

## Worked example

Three Novig-style markets

| Market | Yes bid | No bid | Yes ask | Spread | Fair midpoint | Half spread |
| --- | --- | --- | --- | --- | --- | --- |
| Tight | 49% | 50% | 50% | 1 pt | 49.5% | 0.5 pt |
| Typical | 55% | 42% | 58% | 3 pts | 56.5% | 1.5 pts |
| Wide | 30% | 62% | 38% | 8 pts | 34.0% | 4.0 pts |


In the typical market, buying 100 Yes contracts at 58% costs $58.00 against a fair value of $56.50, so the spread costs you $1.50. Buying in-game adds 0.06 x 0.58 x 0.42 x 100 = $1.46 of fee. In the wide market, the fair price is unreliable: a 4-point half spread swamps most edges. The [Novig odds converter](https://novigapi.com/novig-odds-converter) shows bid, ask and midpoint in American odds.

## Using spread data

Our `/markets` and `/fair-price` endpoints return the bid, the implied ask and the spread for every two-sided market, and the live panel beside this page ranks Novig's tightest and widest markets right now. Spread is the best quick filter for which fair prices to trust: a fair price from a 1-point market is a much better benchmark than one from an 8-point market.

## Common mistakes

- Treating the midpoint as a price you can trade. You buy at the ask and sell at the bid.
- Comparing an exchange's spread to a sportsbook's hold directly. They measure similar costs but are calculated differently.
- Ignoring depth. A 1-point spread with ten contracts behind it is not a liquid market.

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