Midspreads
Midspreads are a concept primarily used in financial markets, particularly in the context of trading. They refer to the difference between the mid-price of a security and its last traded price. The mid-price is calculated as the average of the best bid price and the best ask price currently available in the market for that security. Therefore, a positive midspread indicates that the last trade occurred at a price lower than the midpoint between the bid and ask, while a negative midspread means the last trade was at a price higher than the midpoint.
This metric can provide insights into market liquidity and trading activity. A tight midspread, where the mid-price