Bid - Offer spread

When stocks & shares (and Unit Trusts and PEPs and ISAs) are traded, they have two prices - a Buying Price and a Selling Price.

The price that you have to pay when buying shares is the Offer price, and the price you get when you sell is the Bid price.

The difference in between - typically about 5% - is used to cover the costs and expenses of the stockbrokers etc.

In simple terms, it is like going into a bank and handing over £100 and exchanging it for some US dollars. If you then walked around the block, went into the bank and handed the dollars back, you would find that even without commission, you may only get back £95. This is because there are "We buy at" and "We sell at" rates.

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