Like stocks, exchange traded fund prices can change through the day, and investors seeking to take on positions will have to be mindful of the bid/ask spreads when determining the best point to enter or exit a trade.

The bid/asks spread is the difference between the bid or ask price of a particular stock. More often than not, the asking price of an investment exceeds the bidding price – the number of sellers tend to exceed the number of buyers.

Since the bid/ask spread is based on the market supply and demand, highly liquid ETFs usually have tight bid/ask spreads that are just pennies apart, whereas thinly traded ETFs may show wider disparities. [How Lower Trading Volume Impacts ETF Investors]

Remember, an ETF’s liquidity is not determined by trading volume alone. It also depends on the liquidity of the securities in which it invests. For example, S&P 500 companies are more liquid than emerging market bonds.