Half Spread
Half spread is half of the quoted bid ask spread: (ask − bid)/2. It is the distance from midquote to either best quote.
Definition
Half spread is half of the quoted spread. It is the distance from the midquote to either the best bid or the best ask.
Formula: HS = (best ask - best bid) / 2
Why it matters
Half spread is a convenient building block for execution cost metrics. It represents the baseline one way cost to cross the market from the midpoint.
Relation to effective spread
If your trade fills exactly at the best quote (buy at ask, sell at bid), then effective spread equals the quoted spread and the one way cost to mid equals the half spread.
Common pitfalls
Assuming it is the full cost: In thin markets, real execution can be worse due to slippage and price impact.