How Forex, Stocks & Crypto Markets Work

Financial markets explained simply are places where a price is agreed between a buyer and a seller. What makes forex, gold, stocks and crypto feel so different is everything around that agreement: when it can happen, who sits in the middle, what you end up holding and what protection you have if the middle party fails.

Four markets at a glance

How the forex market is organised

There is no single building where currencies change hands. Prices are formed across a network of banks, dealers and electronic platforms, and the trading day follows the sun from Sydney and Tokyo to London and New York. Retail traders almost always deal through a broker, which quotes a buy and a sell price and earns the gap between them. The whole structure is covered in the forex guide.

Gold sits close to forex in practice. It is quoted against the dollar, traded almost continuously on weekdays and, for retail traders, often offered as a leveraged contract. Holding a physical coin or bar is a separate route, with storage and dealer margins instead of spreads and overnight charges.

How stock markets differ

Shares trade on named exchanges with published rules and opening hours: New York runs 09:30 to 16:00 local time, London 08:00 to 16:30, Tokyo in two sessions with a lunch break. When the exchange is shut, the price mostly waits, and news that breaks overnight shows up as a jump at the next open. A share is also a claim on a real business, with a right to vote and to any dividends. The stock market guide starts there.

How crypto markets differ

Crypto trades continuously on many venues at once, each with its own order book, so the same coin can carry slightly different prices in different places. Transfers settle on a public blockchain rather than through a clearing house, and a mistaken transfer is usually final. Crypto also leaves you a choice other markets do not: hold the asset through an exchange, or hold the keys yourself. See how crypto works.

Who holds your assets

This is the question beginners skip and experienced investors ask first.

• Shares bought through a regulated broker are normally held in a nominee account, separate from the broker's own money, so a broker failure should not mean the shares are lost.
• Forex and gold CFDs are contracts with the provider. You own no currency or metal, only a promise to settle the price difference. Client money rules in regulated countries require your cash to be kept apart from the firm's.
• Crypto on an exchange is a balance on that company's books. Protections vary enormously from country to country and platform to platform, and several large exchange failures have left customers waiting years for part of their money.

Leverage: the same idea, very different caps

Leverage lets a small deposit control a larger position. For retail clients of CFD providers in the UK and EU, regulators cap it at 30:1 on major currency pairs; 20:1 on other pairs, gold and major indices; 10:1 on other commodities; 5:1 on individual shares; and 2:1 on crypto. Firms must close positions when your margin level falls to 50% of the requirement, and retail clients cannot lose more than their account balance. In the US, retail forex is capped at 50:1 on major pairs. You can see what those caps mean in money with the margin calculator.

Settlement and the price you really pay

US share trades settle one business day after the trade. A leveraged forex position never settles in the usual sense: it rolls from day to day at 17:00 New York time, with a financing charge or credit each night. A blockchain transfer settles when it is confirmed, often within minutes. Each route carries its own costs, and the trading fees guide lists them in one place.

If you are comparing markets because someone is urging you towards one of them, read how to spot trading scams before going further. Urgency is rarely a feature of honest markets.

Choosing where to start reading

Most confusion comes from mixing up the market with the product. "Trading gold" might mean buying a coin, holding a fund or opening a leveraged contract through a forex broker, and those three carry completely different risks. Before comparing returns, write down three things: what you would actually own, who would hold it, and how much you could lose on a bad day. If you cannot answer all three, the product is not yet understood well enough to buy.

From here, the forex guide is the natural next step if currencies or gold brought you here, the stock market guide if you are thinking about shares or funds, and how crypto works if someone has mentioned coins or USDT. Each ends with the checks to run before any money moves.

Sources

• UK Financial Conduct Authority, CFD rules for retail clients
• European Securities and Markets Authority, product intervention measures on CFDs
• US Securities and Exchange Commission, T+1 settlement rule