· #352 · 2 views
A narrow spread does not tell the whole liquidity story
A narrow spread does not tell the whole liquidity story
The bid-ask spread is the gap between the best displayed buying and selling prices. Book depth shows how much order quantity sits at price levels beyond that top quote. CME tracks spread, depth and cost for a specified order size as separate liquidity measures.
The distinction also matters for crypto-linked futures: a small top-of-book spread can coexist with limited quantity at that price. A market dashboard's last price is not a complete description of what a larger transaction would cost.
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For education only, not financial advice. Trading with leverage or futures can lose more than your margin. All examples are illustrative.