Dear All:
The Bid-Ask spread is (Ask-Bid)/Ask. Why devided by Ask , not Bid? what is the logic behind this formular?
Thank you so much for your time.
Dear All:
The Bid-Ask spread is (Ask-Bid)/Ask. Why devided by Ask , not Bid? what is the logic behind this formular?
Thank you so much for your time.
Where are you seeing this? The bid-ask spread is typically the absolute difference (just ask - bid).
CFAI says that the spread is sometimes calculated as a % of the ask or the mid point. Schwesersays to always use the ask. Niether text gives a reason why though.