The short version
- Shares trade on central exchanges, forex trades over the counter between dealers, and crypto trades on many separate platforms.
- Owning an asset and holding a contract (such as a CFD) on its price are different things with different risks.
- Protection for your money depends on the firm's licence, not on the market you trade.
Financial markets explained in one line: they are places, physical or electronic, where buyers and sellers agree a price. The detail that trips people up is how each market is organised, because that decides who quotes your price, who holds your money and what happens if a firm fails.
Three ways a market can be organised
Central exchanges
Shares and many futures trade on regulated exchanges such as the New York Stock Exchange, Nasdaq, the London Stock Exchange or the Tokyo Stock Exchange. Every order goes into a shared order book, prices are public and the exchange sets trading hours. You reach the exchange through a broker; you cannot usually walk up to it yourself.
Over-the-counter dealer networks
The foreign exchange market has no single venue. Banks, large dealers and electronic networks quote prices to each other around the world. A retail forex provider builds its own prices from those quotes, which is why two providers can show slightly different rates at the same second.
Crypto platforms
Crypto-assets trade on hundreds of independent platforms, each with its own order book, plus decentralised exchanges that run as software on a blockchain. There is no single official price, and the level of oversight varies from strict licensing to none at all.
Financial markets explained side by side
| Market | What changes hands | Typical trading hours | Main price drivers |
|---|---|---|---|
| Forex | One currency for another, e.g. EUR/USD | Sunday 17:00 to Friday 17:00 New York time | Interest rates, inflation, growth data |
| Shares | Part-ownership of a listed company | Exchange sessions on weekdays | Earnings, outlook, interest rates |
| Indices | Exposure to a basket, via funds, futures or CFDs | Follow the underlying exchange, with extended futures hours | The combined moves of the members |
| Gold | Physical metal, futures or price contracts | Nearly 24 hours on weekdays | The US dollar, real interest rates, demand for safety |
| Crypto | Coins and tokens recorded on a blockchain | Continuous, every day | Sentiment, liquidity, regulation, adoption |
Our market hours board shows which of these are open at this moment in your time zone.
Owning something versus holding a contract
This is the distinction newcomers most often miss. When you buy a share through a stockbroker, you become the beneficial owner of that share, usually held for you in a nominee account. When you buy a contract for difference (CFD) on the same share, you own nothing but an agreement with the provider to settle the change in price. The CFD can be leveraged and sold short easily, but your counterparty is the provider itself.
The same split exists in crypto. Buying Bitcoin you can withdraw to your own wallet is ownership. A "Bitcoin" position on a derivatives platform is a contract. In the UK, crypto derivatives cannot be sold to retail consumers at all; in the EU, retail leverage on crypto CFDs is capped at 2:1.
Who is on the other side of your trade?
On an exchange, the other side is another market participant, matched anonymously. With a forex or CFD provider, it may be the provider itself (a "market maker" model) or a bank the provider passes your order to. Neither model is automatically bad, but a firm that profits when clients lose has an obvious conflict, which is one reason regulators require fair pricing and execution policies. The checks in how to choose a broker help you find out which model a firm uses.
What protects your money in each market
Protection comes from the licence of the firm you deal with, not the asset. A broker authorised in the UK, EU or Australia must keep client money separate from its own funds, and retail clients get leverage caps: 30:1 on major currency pairs, 20:1 on gold and major indices, 5:1 on individual shares and 2:1 on crypto. UK and EU retail CFD clients also cannot lose more than their account balance.
A firm licensed in a light-touch jurisdiction, or not licensed at all, may offer none of these. The same currency pair traded through two different companies can therefore carry very different risks.
Why two screens can show different prices
On a stock exchange, everyone sees the same order book, so quotes from different brokers for the same share should match closely during trading hours. In forex and CFDs, each provider builds its own price from the feeds it receives and adds its own spread, so quotes differ slightly between firms. In crypto, each platform has a separate order book, and the gap between venues can be larger during fast markets or on thinly traded tokens.
These differences are normal. What is not normal is a platform whose prices never match anywhere else, or whose charts show moves that other sources do not. That is a warning sign that the platform may be generating its own numbers.
Settlement: when a trade is finished
US shares now settle one business day after the trade (T+1). Spot forex transactions usually settle two business days later in the interbank market, although retail providers roll positions over daily instead. A crypto transfer settles when it is confirmed on the blockchain and, unlike a card payment, cannot be reversed. That last point is why crypto is the payment method of choice for fraudsters, a theme picked up in our scam guide.
Where to go from here
Choose your next step
- Currencies: how forex trading works.
- Companies and indices: the stock market for beginners.
- Digital assets: how crypto works and what USDT is.
- Costs everywhere: trading fees explained.
Reader questions
Is forex a regulated market?
The market itself has no single regulator because it has no single venue, but the firms that offer forex trading to the public are regulated in most major countries. Your protection depends on which firm you use and where it is licensed.
Is buying a CFD the same as buying the asset?
No. A CFD is a contract with the provider that pays out the change in price. You do not own the underlying share, coin or metal, and the provider is your counterparty.
Which market is open the longest?
Crypto trades continuously every day. Forex runs around the clock from Sunday evening to Friday evening New York time, while stock exchanges keep fixed weekday sessions.
Sources
- European Securities and Markets Authority, product intervention measures on CFDs
- UK Financial Conduct Authority, restrictions on CFDs and crypto-derivatives for retail consumers
- US Securities and Exchange Commission, T+1 settlement rule