Module summary
- Forex is a decentralised network of dealers, shares trade on regulated exchanges, and crypto trades on many independent platforms plus the blockchain itself.
- Custody decides your risk if a firm fails: nominee accounts for shares, a contract for CFDs, a claim on the platform or your own keys for crypto.
- Hours, settlement and leverage rules differ sharply, and those differences explain much of the behaviour you see on a chart.
Financial markets explained well start with structure, not with charts. The same candlestick can sit on top of three very different machines, and the machine decides who you are trading with, who holds your assets, when prices can move and what protection you have if something breaks. This module lines up forex, stocks and crypto on those points so the later modules have a map to hang on.
Three market structures
Forex: a network without a centre
There is no single currency exchange. Large banks and specialist dealers quote prices to one another and to their clients, and those quotes are linked by constant arbitrage. A retail trader usually deals with a broker, which either takes the other side of the trade or passes it into this dealer network. The price you see is the broker's quote, close to but not identical with any other.
Stocks: regulated exchanges and brokers
Shares are listed on exchanges such as the NYSE, Nasdaq, the London Stock Exchange or Xetra. Each runs a central order book with published rules, and brokers route client orders to it or to other regulated venues. Prices for a given share are therefore tightly aligned, and every trade is reported.
Crypto: platforms plus a public ledger
Crypto-assets trade on hundreds of independent platforms, each with its own order book, so the same coin can show slightly different prices at the same moment. Underneath sits the blockchain, a shared ledger that records transfers between addresses. Trades inside a platform usually happen in its internal database; only deposits and withdrawals touch the chain.
When each market trades
| Market | Regular hours | What happens outside them |
|---|---|---|
| Forex | Sunday 17:00 to Friday 17:00 New York time | Weekend news is priced in at the Sunday open, sometimes with a gap |
| US shares | 09:30 to 16:00 New York, weekdays | Limited extended-hours trading; most price discovery waits for the open |
| London shares | 08:00 to 16:30 London, weekdays | Closed; futures and other markets may move instead |
| Crypto | Continuous, every day | No closing bell, so weekend liquidity is thinner but trading never stops |
The session board on our homepage shows which of these is open at this moment in your time zone.
Who holds what you buy
Custody is the least exciting topic in finance and the one that matters most when a firm collapses.
- Shares bought through a regulated broker are normally held in a nominee account, legally separate from the broker's own assets. If the broker fails, the shares should be returned to clients, and many countries add a compensation scheme up to a limit.
- Forex and CFDs are contracts between you and the provider. You own a claim, not currency or shares. Regulated providers must segregate client money, but you remain exposed to the provider's conduct.
- Crypto held on a platform is a claim on that platform. Held in your own wallet, it is controlled by whoever holds the private keys. There is usually no compensation scheme either way.
Settlement and leverage
Settlement is the moment ownership and money actually change hands. US shares settle one business day after the trade (T+1). Rolling spot forex positions are never settled in the delivery sense; instead they are rolled forward at 17:00 New York time each day, with a financing charge or credit. A crypto withdrawal settles when the transaction is confirmed on its blockchain.
Leverage rules follow regulation. For retail CFD clients in the UK and EU the caps are 30:1 on major currency pairs, 20:1 on non-major pairs, gold and major indices, 10:1 on other commodities and minor indices, 5:1 on individual shares and 2:1 on crypto. The margin calculator shows what those ratios mean in cash.
Regulation and what it buys you
Regulation is not a guarantee of profit or even of safety, but it sets minimum standards: capital requirements, segregation of client money, fair-dealing rules, complaint routes. Stock and forex providers in major jurisdictions have operated under such rules for decades. Crypto regulation is newer and uneven; the EU's MiCA framework now licenses many service providers, while other countries have lighter or no regimes. A platform's licence status is therefore the first thing to check, in every market. Our broker checklist shows how.
How the three markets influence each other
The boundaries between these markets are porous. A change in US interest-rate expectations moves the dollar, which changes the value of overseas earnings for multinational companies and so their share prices; the same shift in expectations alters how much investors will pay for assets with no yield, a group that includes most crypto-assets. On days of market stress, correlations that normally look weak can jump, and assets that seemed to offer diversification fall together.
That is one reason this knowledge base treats the three markets side by side rather than in isolation. Learning how each is built makes it easier to see why a single piece of news can travel through all of them in minutes, and why a position in one market can carry hidden exposure to another. The market-reading module shows how to trace those links on a normal trading day.
Self-check
- Can you say who holds your asset in each of the three markets?
- Why can a currency pair open on Sunday at a different price from Friday's close?
- Which of the three has no central order book at all?
Questions from readers
Is the forex market bigger than the stock market?
By daily trading volume, currency markets are generally larger than stock markets, because banks, companies and funds exchange currencies constantly. Size of turnover says nothing about how risky a particular trade is, however.
Why do crypto prices differ between platforms?
Each platform runs its own order book with its own buyers and sellers. Arbitrage traders narrow the gaps, but small differences persist, especially during fast moves or on less liquid platforms.
Do I own the currency when I trade forex with a broker?
Usually not. Most retail forex is traded as a rolling spot contract or CFD, which gives you exposure to the price without delivery of the currency itself.
Sources
- European Securities and Markets Authority, CFD product intervention measures
- US Securities and Exchange Commission, T+1 settlement cycle rule