The essentials
- Forex and gold trade through a dealer network almost around the clock on weekdays; shares trade on exchanges in fixed sessions; crypto never stops.
- Who holds your asset differs sharply: nominee accounts for shares, a contract for CFDs, a wallet or an exchange balance for crypto.
- Leverage limits and investor protections are strictest for regulated forex and share products and weakest for offshore crypto platforms.
Financial markets explained in a single line would be: places where buyers and sellers agree a price for something that will change hands. The detail is where they differ, and those differences decide how much risk you carry before any price has moved. This page compares the four markets TradoGlobal covers on the questions that matter most to a long-term investor.
Financial markets explained through four questions
Every market can be described by answering four questions. How is the price set? Through a central order book, or by dealers quoting to each other? When can you trade? Fixed sessions, or around the clock? What do you actually own? The asset itself, a claim on a firm, or a contract that pays the difference? What protects you if an intermediary fails? Segregation rules, a compensation scheme, or nothing at all?
Keep those four questions in mind as you read the sections below. They explain far more about risk than daily price swings do.
Forex: a network without a centre
Currencies trade over the counter. Large banks quote prices to one another, and brokers pass prices on to their clients. There is no single exchange and no single price; quotes from different sources agree closely because any gap is quickly traded away. The market runs from Sunday 17:00 to Friday 17:00 New York time, following daylight from Asia to Europe to North America. Most retail access is through CFDs or rolling spot contracts, which means you hold a contract with your provider rather than the currency itself. Our forex guide covers the mechanics in depth.
Gold trades in much the same way. Spot gold (XAU/USD) is quoted in dollars per troy ounce by dealers, with futures exchanges running alongside. Retail clients in the UK and EU face a 20:1 leverage cap on gold, lower than the 30:1 allowed on major currency pairs.
Shares: exchanges with opening hours
Company shares trade on regulated exchanges, each with a published session. New York runs from 09:30 to 16:00 local time, London from 08:00 to 16:30, Frankfurt's Xetra from 09:00 to 17:30 and Tokyo in two sessions either side of a lunch break. Prices form in a central order book, and when an exchange is closed the price of its shares effectively stands still until the next open. News that arrives overnight appears as a gap between one close and the next open.
When you buy shares through a broker, they are normally held for you in a nominee account, separate from the broker's own money. US share trades settle one business day after the trade (T+1). More in the stock market guide.
Crypto: many venues, no closing bell
Crypto-assets trade on hundreds of platforms at once, all day, every day. Each platform has its own order book, so prices differ slightly between them. The asset itself lives on a blockchain, and whoever controls the private key controls the coins. If you leave coins on a platform, what you really hold is a balance in its internal records, and your protection depends on how that firm is run and regulated. See how crypto works.
Indices: measuring a market
An index condenses a market into one number. Share indices such as the S&P 500, the FTSE 100 or the Nikkei 225 track baskets of listed companies; currency indices track the dollar or another currency against a basket of others. Indices themselves cannot be bought, but funds track them and many platforms offer contracts based on them. Understanding how an index is weighted (by company value or by share price) explains why a few large companies can move it on their own.
The same questions, answered side by side
| Question | Forex and gold | Shares | Crypto |
|---|---|---|---|
| Price formation | Dealer quotes, over the counter | Central exchange order book | Separate order book on each platform |
| Trading time | 24 hours, Sunday evening to Friday evening (New York) | Fixed weekday sessions | Continuous, including weekends |
| What retail clients usually hold | A CFD or rolling contract with a provider | Shares in a nominee account | Coins in a self-held wallet, or a platform balance |
| UK/EU retail leverage cap | 30:1 majors; 20:1 other pairs and gold | 5:1 on share CFDs | 2:1 on crypto CFDs (not sold to UK retail clients) |
| Settlement | Positions rolled daily at 17:00 New York | T+1 in the US | On-chain, typically minutes |
How the markets connect
These markets move each other. A rise in US interest rates tends to lift the dollar, weigh on gold (which pays no interest) and change what investors will pay for shares. A fall in risk appetite can push money into the dollar, yen and Swiss franc at the same time as shares and crypto fall. Because gold and many commodities are priced in dollars, a stronger dollar makes them dearer for everyone else. None of these relationships is fixed, but knowing they exist helps explain moves that look random in isolation.
What this means for a long-term investor
Over a horizon of years, the structural features matter more than the day-to-day noise. Leverage decides whether a bad month is survivable. Custody decides what happens if a firm fails. Costs, especially ones charged every day a position is open, decide how much of any return you keep. Start with the guide to trading fees and the checklist for choosing a provider before comparing any individual market.
Reader questions
Which of these markets is the largest?
By daily turnover, the foreign exchange market is the largest, according to the Bank for International Settlements' triennial surveys. Size says nothing about whether it suits a particular investor, though.
Why do share prices jump at the open?
Because the exchange was closed while news arrived. Buyers and sellers meet again at the open and the first trades reflect everything that happened overnight, which can leave a gap on the chart.
Is a CFD the same as owning the asset?
No. A CFD is a contract with a provider that pays the difference between opening and closing prices. You gain or lose from the price move, but you do not own the currency, share or coin, and you depend on the provider.
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
- Bank for International Settlements, Triennial Central Bank Survey