The numbers first
- Forex and spot gold trade over the counter through dealer networks; shares trade on regulated exchanges; crypto trades on hundreds of separate venues.
- Session hours, settlement speed and investor protection differ sharply from one market to the next.
- UK and EU retail leverage caps run from 30:1 on major currency pairs down to 2:1 on crypto CFDs.
Financial markets explained in one sentence: they are places, physical or electronic, where buyers and sellers agree a price for something. The detail that matters to a trader is how that agreement happens, because it decides the hours you can trade, the costs you pay and the protection you have if something goes wrong.
Five markets, three structures
Most retail activity touches five kinds of market: currencies, gold, individual shares, stock indices and crypto-assets. They fall into three broad structures.
- Over the counter (OTC). Currencies and spot gold have no central exchange. Banks and dealers quote prices to each other and to their clients over electronic networks, and each quote is a bilateral deal.
- Exchange-traded. Shares and index futures trade on regulated exchanges with a central order book, published rules and a clearing house that stands between buyer and seller.
- Fragmented venues. Crypto-assets trade on many independent platforms, each with its own order book, plus decentralised protocols that run on a blockchain. Prices on different venues are kept close by arbitrage rather than by a single rulebook.
Indices are a special case: an index is a calculation, not an asset. You get exposure through futures, exchange-traded funds or CFDs whose prices follow the index.
Financial markets explained in one table
| Forex | Gold (spot) | Shares | Crypto | |
|---|---|---|---|---|
| Where prices form | Dealer network | Dealer network | Exchange order book | Many separate venues |
| Hours | Sun 17:00 to Fri 17:00 New York | Nearly 24 hours on weekdays, with a short daily break | Fixed exchange sessions | Continuous, every day |
| Typical retail access | CFD, spread bet, forex account | CFD, ETF, bullion dealer | Broker account, ISA or similar | Crypto platform or self-custody wallet |
| UK/EU retail leverage cap (CFDs) | 30:1 majors, 20:1 others | 20:1 | 5:1 | 2:1 (not sold to UK retail) |
| Settlement | Rolled daily at 17:00 New York | Rolled daily for CFDs | T+1 in the US | On-chain, minutes; internal on a platform |
Who is on the other side
When you buy on a stock exchange, your order is matched with another participant's sell order. When you buy a currency CFD, your counterparty is usually the provider itself, which may hedge the position in the wider market or hold the risk on its own book. That difference explains why forex costs are quoted as a spread set by the provider, and why the provider's regulation and financial strength matter so much. We cover this in how to choose a broker.
Behind retail flows sit much larger participants. In currencies, central banks, commercial banks, corporations paying for imports and asset managers hedging foreign holdings do most of the volume. In shares, pension funds and index funds are major holders. In crypto, the mix is more retail-heavy, and a large part of trading runs through a small number of big platforms.
Hours and gaps
Hours shape risk. A share that closes in London at 16:30 cannot react to news until the next morning, so the price may open well away from the previous close, a move called a gap. Currencies trade through the weekday night but close at the weekend, so weekend events show up as gaps on Sunday evening. Crypto has no close, which removes gaps but means prices can move sharply while you sleep. The live board on our homepage shows which venues are open at this moment.
What you own and who protects it
With a regulated stock broker, shares are usually held in a nominee account separate from the broker's own assets, and several countries run compensation schemes if a firm fails. With a CFD you own a contract, not the underlying asset; retail clients in the UK and EU benefit from margin close-out rules and negative balance protection, so losses cannot exceed the money in the account. On a crypto platform you typically hold a claim on the platform, while self-custody means you hold the keys, and the responsibility, yourself.
Gold and indices: the in-between markets
Gold sits between the other structures. Physical bullion changes hands between banks and dealers much like currencies, gold futures trade on exchanges, and exchange-traded funds hold metal on behalf of their shareholders. Most retail traders meet gold as XAU/USD on a forex-style screen, priced per troy ounce in dollars. Stock indices are similar in a different way: the cash index is only a calculation, but futures, funds and CFDs let you trade it, and each route has its own hours, costs and leverage. Knowing which version you are trading tells you which rulebook protects you.
Leverage by market
Source: ESMA and FCA product intervention rules for retail clients. Australia's ASIC applies similar caps. The UK does not allow crypto derivatives to be sold to retail clients at all.
The caps reflect how volatile regulators consider each asset. Currencies move least in percentage terms, so they get the highest cap; crypto moves most, so it gets the lowest. You can see what each cap means in collateral with our margin calculator.
Where to go next
- How forex trading works, from quotes to sessions
- The stock market for beginners
- How crypto works and what USDT is
Reader questions
Which financial market is the largest?
By daily turnover, the foreign exchange market is the largest in the world, according to the Bank for International Settlements' triennial survey. Most of that volume is between banks and institutions rather than retail traders.
Is a CFD the same as owning the asset?
No. A CFD is a contract with a provider that pays the difference in price between opening and closing. You have no ownership rights in the underlying share, currency or coin.
Why do different markets have different leverage limits?
Regulators set lower caps for assets that tend to move more. Major currency pairs are allowed the most leverage for retail clients, and crypto-assets the least.
Sources
- European Securities and Markets Authority, CFD product intervention measures
- UK Financial Conduct Authority, CFD rules and crypto-derivatives ban (2021)
- Bank for International Settlements, Triennial Central Bank Survey