The digital era · 2000–today
2001
Prices in cents
US stocks switch from fractions to decimals, and spreads shrink.
US stock prices had been quoted in fractions of a dollar, with the gap between buy and sell prices often 1/16 of a dollar. In 2001 exchanges switched to cents, and spreads narrowed.
💡 Why it made sense then
Fractions were a leftover from old trading customs, and cents made trading cheaper for investors.
Ideas it gave us
- 🧾 Bid-ask spread
The bid is the highest price a buyer will pay right now, the ask is the lowest price a seller will accept, and the spread is the gap between them.
- 🧾 Slippage
Slippage is the difference between the price you expected and the price you actually got on a trade.
Practise with $10,000 in play money
Free. No real money involved.