How the Forex Market Is Structured and Who Trades In It

Forex has no central exchange. There is no single order book, no closing bell and no one official price. Understanding that is the difference between reading the market accurately and assuming it works like a stock exchange.

It is over-the-counter, in tiers

FX trades over-the-counter (OTC) — directly between counterparties across a decentralised network rather than through a central venue. The market is layered:

1. The interbank tier. The largest dealer banks trade with each other and quote prices to clients. A handful of institutions handle a very large share of global volume.
2. Electronic venues and prime brokers. Multi-bank platforms and prime-brokerage relationships give funds and large corporates access to dealer liquidity.
3. Retail brokers. They aggregate price feeds from liquidity providers and pass a marked-up version to retail clients.

Because pricing is decentralised, two brokers can show slightly different prices for the same pair at the same moment. There is no violation in that — there is no single reference price to violate.

Who is actually in the market

• Central banks — set monetary policy, hold reserves and occasionally intervene directly. The most consequential participants, and not price-sensitive in the way other participants are.
• Commercial and investment banks — make markets, execute client flow, manage their own risk.
• Corporations — importers, exporters and multinationals converting revenue and hedging currency exposure on real commercial cash flows.
• Asset managers, pension funds and hedge funds — hedging international holdings or taking positions.
• Retail traders — individuals via online brokers. The smallest tier by volume.

The BIS 2025 survey found the surge in that year's activity was driven substantially by hedging demand rather than speculation. It is a mistake to model FX as a market of speculators; most participants are not trying to predict prices at all.

The 24-hour clock, and why it is not 24-hour liquidity

The market runs continuously from Sunday evening to Friday evening (US Eastern time) as trading centres open in sequence: Sydney → Tokyo → London → New York. London and New York handle the largest share of turnover; sales desks in the UK, US, Singapore and Hong Kong accounted for 75% of global FX trading in April 2025.

"Open 24 hours" is not the same as "liquid 24 hours." Liquidity concentrates in the session overlaps — particularly London/New York. Outside those windows spreads widen and price can move further on less volume. And the weekend gap is real: the market closes at one price on Friday and can reopen materially away from it on Sunday, which is why a stop order does not guarantee a weekend exit price.

Order types, and what they do not promise

• Market order — executes immediately at the best available price. What you get is not guaranteed to be what you saw. Slippage — the difference between expected and filled price — is normal in fast markets and around news.
• Limit order — executes only at your specified price or better. Price control, no execution guarantee. It may never fill.
• Stop order — becomes a market order when a trigger price trades. Used to exit losses (stop-loss) or enter on a breakout. Because it converts to a market order, a stop-loss caps your intended exit level, not your actual loss. In a gap it fills at the next available price, which can be far worse.
• Guaranteed stop — offered by some regulated brokers, usually for a premium, and does fill at the specified level. Availability depends on jurisdiction and broker.

The structural point worth keeping

Your counterparty matters. Some retail brokers pass orders through to external liquidity; others internalise them and take the other side. Both models are legal in many jurisdictions and both are disclosed in account documentation that almost nobody reads. Whether your broker is regulated, where it is regulated, whether client funds are segregated, and what happens if it fails are questions with concrete answers you can look up on a regulator's public register before opening an account.

Next: the four types of forex market.