The trade price on the Exchange is determined through buy and sell orders in the order book, a process known as price discovery.
Price Discovery
When you place an order to sell an asset at a specific price, and another user is willing to buy at that price, the two of you have effectively set the trade price. This happens continuously across all participants in the market — the collective actions of buyers and sellers establish the price at any given moment.
Understanding the Spread
The spread is the difference between the lowest ask price (sell order) and the highest bid price (buy order). In the screenshot above, for example, the spread is the gap between the lowest sell order and the highest buy order — shown as "25.52 (4 BPS)."
A narrower spread generally means a more liquid, efficient market; a wider spread can mean higher costs when executing trades.
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