In this post we will go a little deep into a misunderstood topic: how to get the best price when exchanging our coin for another currency and avoid to pay the spread.
First. What is the spread?
We can define easily the spread as the distance between the lowest buyer and the highest seller.
So a healthy market has buyers on a side and sellers on the other side, just like every other market:
this characters fight all the time because everyone want to get the best price.
Immagine when you want to buy a car, what do you need?
You need money of course and someone that wants to sell you a car.
Financial markets are not so different:
if you want to buy you will be a buyer( bidder) and if you want to sell you will be a seller (asker).
It's so easy!
We introduce the concept of bidder and asker with the previous example and here is the key:
let's repeat the concept togheter applying it to financial markets:
If you want to buy steem, you will be a buyer and you will be on the buy side where is the lowest bid.
if you want to sell steem, you will be a seller and you will be on the sell side where is the highest ask.
Well.
When the majority jump on a exchange, they incredibly sell on the buy side and buy on the sell one!
You are probably saing: yes, of course!
But it's not the way you will get the best price for yourself.
You are litterally buying the car that you want at the price that your seller wants!
It's not good for you.
How can I get the best price?
Look at the second immagine on this post.
When you want to buy you place an order on the lowest bid on the buy side's PRICE (it is on the top of the list).
On the countrary when you want to sell you place an order on highest ask on the sell side's PRICE (it is on the top of the list on the left)
THIS IS THE KEY.
In this way you are waiting that your order will be filled by your car's seller, and not the countrary.