Stock Price Spread Calculation: Analysis and Cost Comparison for 2025

What is the stock ask price spread?

The “stock bid-ask spread” refers to the costs you incur when trading stocks. Brokers collect this money to process your trade orders. How much is the spread? It depends on how you trade, your trading frequency, which broker you choose, and so on.

The price difference includes “transaction commissions” and some “other fees” such as clearing fees and transaction taxes. It's best to clarify these things before starting to invest.

How to calculate the price difference in Taiwan stocks?

Taiwanese people invest in Taiwanese stocks, mostly through securities accounts. The costs are mainly these: '0.1425% handling fee' and '0.30% securities transaction tax'. The transaction tax is only collected when selling. Taiwanese brokerage firms usually offer a discount of 50% to 60% on the handling fee. It's quite good.

The algorithm is as follows:

When buying:

• Transaction Fee = Stock Price × Number of Shares × 0.1425% × Discount

When selling:

• Fee = Stock Price × Number of Shares × 0.1425% × Discount
• Transaction tax = Stock price × Number of shares × 0.30%

For example. Buying and selling 1 share of stock at N$200, the broker gives a 40% discount, the cost is:

How to calculate the price difference in US stocks?

Want to buy US stocks? You can use overseas brokers or the proxy trading service of Taiwanese brokers. The costs include handling fees and other expenses (0.3% settlement fee, 0.0008% Securities and Exchange Commission fee, 0.0145% trading activity fee, and 30% dividend tax). The dividend tax is only collected during the distribution of dividends.

Sub-delegated trading of US stocks

A proxy order means finding a qualified Taiwanese broker to help you place orders with foreign brokers. It has gone through the order process twice. It's a bit convoluted.

Different brokers charge different fees, generally between 0.25% and 1%. Most have a “minimum fee,” so even if you buy just a little, you still have to pay this amount.

The situation of Yuanda:

• Manual order 1%, Electronic order 0.5%-1%
• Minimum consumption: Manual 50 USD, Electronic 35 USD

There are other fees:

• ask price transaction tax 0.00278%
• System service fee 3 USD per transaction
• ADR custody fee $0.02-0.05 per share
• Daily international remittance fee of 15 USD

Comparison of major sub-brokers in Taiwan:

Trading US Stocks with Overseas Brokers

You can also open an overseas brokerage account directly. The market is highly competitive, and many brokers no longer charge transaction fees. This is more cost-effective for small investors compared to delegated trading. However, deposits and withdrawals may incur a fee of around 30 USD.

Four overseas brokers with Chinese interfaces:

Interactive Brokers

• The world's largest online brokerage, capable of purchasing stocks in major global markets.
• The trading interface is a bit complicated, and it's not zero transaction fees.
• No minimum deposit requirement
• Withdrawal Fee: 10 USD
• Transaction Fee: $0.005 per share or adjusted based on monthly trading volume

Mitrade

• Offers a variety of CFD products, including stocks, cryptocurrencies, and forex.
• Minimum deposit: 50 USD
• Free withdrawal times per month
• No transaction fees
• Leverage up to 200 times
• Can trade over 300 US stocks

Onada

• Diversified investment products, popular products with high leverage
• No minimum deposit
• Transaction fee: 0.1%
• Leverage up to 888 times
• Trade over 800 U.S. stocks

Firstrade First Securities

• 24-hour Chinese customer service
• Non-public company
• No minimum deposit
• Withdrawal Fee: 25 USD
• No transaction fees

Effective Spread and Slippage

It's 2025, and when calculating trading costs, one must consider effective spread and slippage. Effective spread measures the difference between the actual transaction price and the best quote:

Effective spread = 2 × |Transaction price - Quote midpoint|

Midpoint price = ( buy price + ask price ) ÷ 2

Slippage is the difference between the price you see when placing an order and the actual price at which the order is executed. It is particularly noticeable during market volatility.

How much to sell stocks to avoid losing money?

The minimum profit for not losing money in the Taiwan stock market:

The rise in stock prices does not necessarily lead to profits. In the previous example, only when the earnings exceed 171 + 771 = 942 yuan can one avoid losses. To realize profits, all costs must be calculated, and the earnings must be higher than the total costs.

The minimum profit for making money in US stocks:

The calculation must be based on the fee details of each platform. The profit from selling must be greater than all the costs associated with buying and selling to avoid losses.

Factors Affecting the Stock Ask Price Spread

The stock ask price spread is influenced by these factors:

trading market

Different markets have different regulations, especially exchanges with different cryptocurrencies. Regulations will change over time. It seems that each market has its own way of playing.

broker

Large brokerage firms offer comprehensive services, and commissions are usually higher, but there may be promotional discounts. The fees of the same brokerage firm can also vary over time. It's wise to compare prices among several.

transaction amount

The price difference is usually calculated proportionally; the larger the amount, the greater the price difference. Large clients may have discounts or fixed fees.

trading frequency

A transaction includes two price differences for buying and selling. The more frequently you trade, the more price differences you pay. High-frequency traders may receive discounts.

Frequently Asked Questions

Q1: What are the trading costs for buying and selling Taiwanese stocks?

A1: Mainly the broker's commission ( 0.1425% ) and transaction tax ( 0.3% ). A commission fee is charged once for both buying and selling, while the transaction tax is only charged upon selling.

Q2: Which brokerage in the Taiwan stock market has the most favorable transaction fees?

A2: All major brokers offer discounts, you need to compare them specifically.

Q3: How to buy US stocks in Taiwan? What US stock brokers do you recommend?

A3: You can use the discretionary agency of a Taiwanese stock brokerage or open an account directly with a US stock brokerage. Mitrade and Interactive Brokers are both good choices.