Market Basics

A market isn’t a building or a website, even though it’s often described as one. It’s just a mechanism for bringing buyers and sellers together so a price can be agreed, and everything else, the exchange, the platform, the order book, is just infrastructure built to make that happen faster and more reliably. Where price comes from Price is simply the point where a buyer and a seller agree, and it moves because that agreement point keeps shifting. If more people want to buy GER40 at a given price than want to sell at it, the price has to rise before enough sellers show up to match them, and if more people want to sell than buy, it falls until buyers are tempted back in. Nobody sets the price directly. It’s the running result of that constant negotiation between everyone participating at once. ...

Nobody controls a market in the sense of a single hand on the wheel, but a small number of participants influence it far more than everyone else combined, and knowing who they are beats assuming price just moves at random. A small number of central banks at the top, down to the many retail traders at the bottom — fewer participants with outsized influence, versus many with individually small influence. ...

Every market runs on the same basic mechanism of buyers and sellers agreeing on price, but what’s being traded, and who’s trading it, differs enough between market types that it helps to know the main ones before picking where to focus. Forex Currencies traded against each other, EURUSD, GBPUSD, USDJPY, and so on. Forex is the largest and most liquid market in the world by trading volume, it runs close to 24 hours a day across different global sessions, and price is driven heavily by interest rate differentials and central bank policy between the two currencies in a given pair. ...