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Does High Trading Volume Always Guarantee a Tight Bid-Offer Spread?

No, while volume usually tightens the spread, extreme one-sided volume during high volatility can cause a temporary widening.
Greeks.Live10.11.25

Does High Trading Volume Always Guarantee a Tight Bid-Offer Spread?

Not always, but high trading volume is strongly correlated with a tighter bid-offer spread. High volume indicates strong market participation and liquidity, which increases competition among buyers and sellers, forcing the spread to narrow.

However, if a sudden, high-volume event is driven by extreme, one-sided panic selling or buying (high volatility), the spread can temporarily widen significantly due to market maker risk aversion.

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