Please help with understanding spread notion. I know what is bid and ask price and I'm used to think that spread is the ask-bid, which is the function of market state. In other words, spread is the difference between the lowest sell order price and highest buy order price. Let's call it "market spread".
But at the same time I read things like "broker makes money from spread" or "broker spread" or "minimum spread is 34$ for BTC/USD". Looks like this is the different spread than market spread?
I guess this spread (broker spread) relates to prices by which you buy some commodity from broker (not sure if this really happens), for example before opening SHORT position. Then you sell it on the market. When closing the position you buy it back from market and sell back to the broker.
Please correct me.
(I'm more interested in stock market, but it should work the same way)
But at the same time I read things like "broker makes money from spread" or "broker spread" or "minimum spread is 34$ for BTC/USD". Looks like this is the different spread than market spread?
I guess this spread (broker spread) relates to prices by which you buy some commodity from broker (not sure if this really happens), for example before opening SHORT position. Then you sell it on the market. When closing the position you buy it back from market and sell back to the broker.
Please correct me.
(I'm more interested in stock market, but it should work the same way)