Bid-Ask Spread in 2026: What Australian Investors Need to Know

The bid-ask spread is the difference between the highest price a buyer is willing to pay (the bid) and the lowest price a seller is willing to accept (the ask) for a security. This difference is a direct cost to traders and investors.

• Bid Price: The highest price that buyers are prepared to pay for a security.
• Ask Price: The lowest price that sellers are willing to accept.
• Spread: The gap between the bid and ask prices.

For example, if you want to buy shares and the bid is $10.00 while the ask is $10.05, the spread is $0.05 per share. When you buy at the ask and sell at the bid, you immediately incur this cost.

In highly traded markets, such as major ASX-listed shares, the spread is often very small. In less liquid markets or for less popular securities, the spread can be much wider.

The bid-ask spread is not just a technical detail—it’s a real cost that can affect your investment returns. In 2026, several factors are influencing spreads across Australian markets:

• Market Volatility: Ongoing global and local economic uncertainty has led to wider spreads in some sectors, especially for shares and ETFs with lower trading volumes.
• Regulatory Oversight: Australian regulators continue to focus on market fairness and transparency, which can influence how spreads are set and disclosed.
• Retail Trading Growth: More Australians are trading directly through online platforms, sometimes in markets or products where spreads are wider.
• Cryptocurrency Markets: While spreads on major cryptocurrencies have narrowed as trading volumes have increased, less popular tokens can still have significant spreads.

If you trade frequently or invest in less-liquid markets, the cost of the spread can add up—sometimes exceeding brokerage fees.

Every time you buy at the ask price and sell at the bid price, you pay the spread. This cost is built into the price you pay or receive, and it can reduce your overall returns.

For example, if you buy 1,000 shares of a company with a $0.10 spread, you’re effectively paying $100 in spread costs. This is separate from any brokerage or platform fees.

The impact of the spread is more pronounced when:

• Trading in shares or ETFs with low trading volumes
• Buying or selling outside of normal market hours
• Trading in volatile or niche markets

Several factors determine how wide or narrow the spread is for a particular security:

Liquidity

Securities that are traded frequently and in large volumes tend to have smaller spreads. For example, large ASX-listed companies usually have tighter spreads than small-cap stocks.

Volatility

When prices are moving quickly, spreads often widen as market makers and traders manage risk.

Market Hours

Spreads are usually narrower during regular market hours when trading activity is highest. Outside these times, spreads can widen due to lower liquidity.

Security Type

Shares, ETFs, and cryptocurrencies can all have different typical spreads. Less common or more complex products often have wider spreads.

While you can’t avoid the spread entirely, there are steps you can take to reduce its impact:

Trade in Highly Liquid Securities

Stick to shares, ETFs, or tokens with high trading volumes. These typically have the narrowest spreads, reducing your transaction costs.

Use Limit Orders

A limit order allows you to set the maximum price you’re willing to pay (when buying) or the minimum price you’ll accept (when selling). This gives you more control over the spread you pay, compared to a market order, which accepts the current ask or bid.

Trade During Peak Market Hours

Spreads are usually tightest when the market is most active. For the ASX, this is generally between 10am and 4pm AEST. Trading during these hours can help you access better prices.

Compare Trading Platforms

Some platforms may have different approaches to spreads and fees. It’s worth reviewing how your chosen broker handles spreads, especially if you trade frequently.

Stay Informed About Market Changes

Regulatory changes and market reforms can affect how spreads are set and disclosed. Keeping up to date can help you make more informed trading decisions.

Several developments are influencing bid-ask spreads for Australian investors this year:

• Market Structure Changes: Ongoing reforms and pilot programs on the ASX are aimed at improving liquidity and narrowing spreads, particularly for ETFs and smaller companies.
• Technology and Algorithms: Advances in trading technology have generally led to tighter spreads in the most liquid markets, though less-traded securities can still see wider spreads.
• Global Events: International developments, such as changes in interest rates or commodity prices, can quickly affect spreads on related Australian securities.

For investors, monitoring these trends can help you anticipate when spreads might widen or narrow, and adjust your trading approach accordingly.

What is the bid-ask spread?

The bid-ask spread is the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept for a security. It represents a direct cost to traders and investors.

Why do spreads widen or narrow?

Spreads tend to narrow when there is high trading volume and liquidity, and widen during periods of volatility, low liquidity, or outside normal market hours.

How can I reduce the impact of the bid-ask spread?

You can reduce spread costs by trading in highly liquid securities, using limit orders, and trading during peak market hours.

Does the bid-ask spread affect all types of investments?

Yes, the bid-ask spread is present in shares, ETFs, and cryptocurrencies, though the size of the spread can vary depending on the product and market conditions.

The bid-ask spread is an important but often overlooked cost for Australian investors in 2026. By understanding what drives spreads and taking practical steps to manage them, you can help protect your investment returns. Stay informed, trade wisely, and keep the spread in mind as part of your overall trading strategy.