How Forex, Stocks & Crypto Markets Work

Financial markets explained simply: a market is anywhere buyers and sellers agree a price. What changes between forex, stocks and crypto is where that agreement happens, who stands in the middle, when the doors are open and what protects you if the middleman fails. Understanding those four things will tell you more about the risks of a platform than any advert will.

Three markets, three structures

Forex: a network, not a building

Currencies change hands between banks, funds, companies and retail brokers through a web of dealers. There is no single exchange and no single official price at any moment; large banks quote prices to each other and to their clients, and retail brokers pass on a price built from those quotes. The market is enormous and deep in the major pairs such as EUR/USD, which is why spreads on them can be very narrow.

Stocks: listed and supervised

A company's shares are listed on an exchange, such as the New York Stock Exchange or the London Stock Exchange, which sets trading rules and publishes prices. Orders reach it through licensed brokers. Exchanges also enforce disclosure: listed firms must report their results on a schedule, which gives investors something concrete to value.

Crypto: many venues, one ledger

Bitcoin and other coins live on public blockchains, but most trading happens on the internal books of centralised exchanges, each with its own price, order book and rules. Decentralised exchanges add another layer, where trades are settled by smart contracts. Because liquidity is split across so many venues, the same coin can trade at slightly different prices at the same moment.

When each market is open

Forex runs from Sunday 17:00 to Friday 17:00 New York time, following the business day from Asia to Europe to North America. Stock exchanges keep fixed local sessions on weekdays: 09:30 to 16:00 in New York, 08:00 to 16:30 in London, and a split session in Tokyo. Crypto trades around the clock, including weekends and holidays. Our market clock shows which of these are open right now.

The practical consequence is the gap. If important news breaks while an exchange is shut, the share price cannot react until the next session opens, and it may open far from where it closed. Crypto absorbs the same news immediately, often with thinner weekend liquidity and sharper swings.

How the markets compare at a glance

Who holds your assets, and what if they fail

This is the question most beginners skip. With a regulated stock broker, your shares are normally held in a nominee structure, separated from the firm's own money, and many countries run a compensation scheme if client assets go missing. With a forex or CFD broker you hold a contract rather than an asset, but regulated firms must segregate client money. With a custodial crypto exchange you hold a claim on the company; how safe that claim is depends on the firm's jurisdiction, its reserves and its honesty. Several large exchange failures have left customers as unsecured creditors.

Crypto also offers something the other two markets do not: self-custody. If you hold the private keys in your own wallet, no company failure can touch your coins, but you alone are responsible for keeping those keys safe. Our crypto explainer covers how that works.

Financial markets explained through one weekend

Imagine a major central bank makes an unexpected announcement late on a Saturday. Bitcoin and other coins react within minutes, because crypto exchanges never close; with fewer traders active at weekends, the move may be exaggerated. Currency dealers cannot respond until the forex week opens on Sunday evening New York time, when pairs involving that central bank's currency may open some distance from Friday's close. Shares wait longest: Asian exchanges open first on Monday morning local time, then Europe, then New York, each pricing in the news as its session begins.

The same event therefore reaches the three markets at different times and through different channels. Anyone holding leveraged positions over the weekend faces the risk that a stop-loss is filled at the opening price rather than the level they set, which is one reason many traders reduce positions before Friday's close.

Who writes the rules

Stock exchanges and brokers are supervised by securities regulators, such as the SEC in the United States or the FCA in the UK. Retail forex and CFD providers fall under the same or similar authorities in most major countries. Crypto regulation is newer and uneven: some countries license exchanges fully, some register them only for anti-money-laundering purposes, and some leave them largely outside the rules. That patchwork is why the firm's home jurisdiction matters so much.

How prices are formed

In every market, the price you see is the latest point where a buyer and seller met, and the quote you get is a pair: a bid (what someone will pay you) and an ask (what you must pay). The gap between them is the spread, a cost you pay on every round trip. Busy markets have narrow spreads; thin markets, small coins and out-of-hours trading have wide ones. Our guide to trading fees shows how the spread adds up.

What moves prices differs too. Currencies respond to interest rates, inflation and trade. Shares respond to company earnings and to the general mood about the economy. Crypto responds to adoption, regulation, liquidity and sentiment, and often moves together with risk appetite in other markets.

Where to go from here

Pick the market you care about most and read its guide: how forex trading works, the stock market for beginners or how crypto works. Then read how to choose a broker before trusting any platform with money.

Sources

• Bank for International Settlements, Triennial Central Bank Survey
• UK Financial Conduct Authority, CFD and crypto-derivative rules for retail clients
• US Securities and Exchange Commission, T+1 settlement cycle