The gist
- Forex is an over-the-counter network with no single exchange; shares trade on regulated exchanges; crypto trades on hundreds of separate platforms.
- What you own differs: a contract with a dealer, a legal stake in a company held for you, or a token you can hold yourself.
- Hours, leverage caps and investor protections vary widely, so the same 5% move means different things in each market.
Financial markets explained in a single sentence: they are places where people who want to swap one asset for another find each other and agree a price. That sounds simple, and yet the three markets most readers ask us about, currencies, company shares and crypto-assets, are built so differently that habits learned in one can hurt you in another. This long read sets them side by side.
Three markets, three designs
Currencies: a network, not a building
There is no forex exchange. Currency trading happens over the counter, through a web of banks, dealers and electronic trading venues that quote prices to one another. A retail trader normally deals with a broker, which either takes the other side of the trade itself or passes it on to larger liquidity providers. Because there is no single venue, there is no single official price at any moment, only a very tight range of competing quotes.
Shares: a regulated auction
Company shares list on exchanges such as the New York Stock Exchange, Nasdaq, the London Stock Exchange or Xetra in Frankfurt. Each runs a rulebook, a matching engine and daily opening and closing auctions. Brokers route your orders there, and in the larger markets rules push them to seek the best available price across venues.
Crypto: many islands
Crypto-assets trade on hundreds of independent platforms around the world, plus decentralised exchanges that run as software on a blockchain. Each platform has its own order book, so Bitcoin has as many prices as there are venues, held close together by traders who buy where it is cheaper and sell where it is dearer.
What you actually own
This is the difference long-term investors should care about most.
| Forex (retail) | Shares | Crypto | |
|---|---|---|---|
| Your asset | Usually a contract with the broker (a CFD or rolling spot position) | A legal share in a company, normally held in a nominee account | A token on a blockchain, or a claim on a platform that holds it |
| Who holds it | The broker records the position | A custodian, separate from the broker's own assets | Either you (self-custody) or the platform |
| Income | None; financing is paid or received overnight | Possible dividends | None by default; some platforms offer staking or lending, with extra risk |
| If the firm fails | Client money rules and, in some countries, a compensation scheme | Ring-fenced client assets; compensation schemes in many countries | Protections vary widely and are often absent |
A share bought through a regulated broker survives the broker's failure because it was never the broker's property. A coin left on a platform may be a line in that platform's database and nothing more. That is why our crypto primer spends so long on custody.
When the markets are open
Currency trading runs from Sunday 17:00 to Friday 17:00 New York time, following the business day around the globe from Sydney and Tokyo to London and New York. Stock exchanges keep office hours: New York trades from 09:30 to 16:00 local time, London from 08:00 to 16:30, Tokyo in two sessions either side of a lunch break. Crypto never stops.
The practical effect is the gap. News that breaks when a market is shut is priced in all at once when it reopens, so a share can open well away from its previous close. Crypto has no gaps in that sense, but it does have thin weekend and overnight trading in which prices can lurch. The live board on our homepage shows which venues are trading right now.
Leverage, and why the caps exist
Retail leverage in the UK and EU is capped for contracts for difference: 30:1 on major currency pairs, 20:1 on gold, non-major pairs and major indices, 5:1 on individual shares and 2:1 on crypto. Australia uses similar limits and the United States allows 50:1 on major currency pairs. In the UK, crypto derivatives cannot be sold to retail customers at all.
Here is why. With an illustrative $1,000 of margin at 30:1, you control a $30,000 currency position. A 1% move against you costs $300, which is 30% of the money you put down. A shareholder who buys $1,000 of stock outright and sees the same 1% fall loses $10. Same market move, very different outcomes. Try your own numbers in the margin calculator.
Settlement and regulation
When you buy US shares, the trade settles one business day later, known as T+1. A forex position with a broker is usually rolled over every evening at 17:00 New York time, with a financing adjustment, and never settles into physical currency unless you ask. A crypto transfer settles when it is confirmed on the blockchain, often within minutes, and cannot be reversed.
Regulation follows the same pattern of maturity. Stock markets have decades of disclosure rules, market-abuse law and custody requirements. Forex brokers that deal with retail clients must be licensed in most major economies. Crypto rules are newer and uneven: some countries now license platforms closely, others barely at all, and many offshore firms serve customers in countries where they hold no licence.
Financial markets explained for the long run
For a long-term investor, the differences above boil down to three questions to ask of any market before putting money in:
- What will I own? A stake in a business, a contract with a dealer, or a token? Only one of those produces earnings over time.
- Who holds it, and what happens if they fail? Check the custody arrangements and any compensation scheme.
- What does holding it cost each year? Overnight financing on leveraged positions can dwarf the spread for anyone holding for months; see our guide to trading fees.
Then read the deeper primer for the market you care about: currencies, shares or crypto.
Reader questions
Which market is the biggest?
By daily turnover the foreign exchange market is the largest, because banks, companies and funds swap currencies constantly for trade and investment. Size is not the same as suitability, though: most of that volume is between institutions, not individuals.
Why do shares have closing prices but crypto does not?
Stock exchanges hold a closing auction at the end of each session, which sets an official closing price. Crypto trades continuously, so any daily 'close' is just a convention, usually midnight UTC, chosen by a data provider.
Can the same investment be traded in more than one of these markets?
Sometimes. A company's shares might be listed in two countries, and some listed funds track crypto prices. Each version follows the rules, hours and protections of the market where it trades.
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 cycle rule