Forex and crypto: the 24-hour markets
Lesson 15 · about 10 min
Forex and crypto get grouped together because both trade around the clock, both are dominated by retail leverage products, and both are marketed hardest to beginners. Under the surface they could not be more different: forex is the oldest and largest OTC market in the world, and crypto is a young, fragmented, loosely regulated ecosystem. This lesson covers each honestly.
Forex
What you are trading
A currency pair. When you "buy EUR/USD at 1.0850", you are buying euros and selling dollars, betting that one euro will be worth more than 1.0850 dollars later. The first currency is the base, the second the quote. Prices are quoted to four or five decimals; the fourth decimal is a pip (for yen pairs, the second decimal). A move from 1.0850 to 1.0860 is 10 pips.
Position sizes are quoted in lots: a standard lot is 100,000 units of the base currency, a mini lot 10,000, a micro lot 1,000. On EUR/USD, one pip on a standard lot is worth about $10; on a micro lot, about $0.10.
Where it trades
Spot forex is OTC. There is no exchange and no consolidated tape. Banks quote each other in the interbank market; your retail broker builds its own price from those quotes and shows it to you. That is why two brokers show different spreads and slightly different prices at the same moment, and why "the price" of EUR/USD is really "a price".
The market runs from Sunday evening to Friday evening (US time), rotating through the Sydney, Tokyo, London and New York sessions. Liquidity peaks when London and New York overlap (roughly 8 am to noon Eastern) and is thinnest in the gap between New York's close and Tokyo's open. Major pairs (EUR/USD, USD/JPY, GBP/USD, USD/CHF, AUD/USD, USD/CAD) have spreads of a pip or less at good brokers; exotic pairs can be 20 to 50 pips.
Leverage and who is on the other side
Retail forex is sold on leverage. In the US, the limit is 50:1 on majors; in the EU and UK, 30:1 for retail; in some offshore jurisdictions, 500:1 or more. At 50:1, a $1,000 deposit controls $50,000 of currency, and a 2% adverse move wipes the account.
On the other side of a retail forex trade is usually your broker. Many retail brokers are market makers who take the other side of client orders and hedge (or do not) as they see fit. Others pass orders straight through to liquidity providers for a commission. Neither model is inherently dishonest, but the first one means your broker profits when you lose, and the incentives in that arrangement are worth a hard look. Choose a broker regulated in a serious jurisdiction (US CFTC/NFA, UK FCA, Australian ASIC, EU regulators). Offshore brokers offering 500:1 and deposit bonuses are where most forex horror stories come from.
What moves it
Interest rate differences between the two currencies, central bank decisions, inflation and employment data, and risk sentiment. Forex trends can last months and be surprisingly orderly; it can also sit in a 50-pip range for a week. It is the most macro of all markets.
Crypto
What you are trading
A coin or token: a unit of a blockchain-based asset. Bitcoin and ether are the two largest; there are thousands of others, most of which are illiquid and many of which will not exist in five years. Prices are quoted against dollars, stablecoins (tokens pegged to the dollar, like USDT or USDC), or other coins.
You can trade crypto three ways:
| Method | What you own | Leverage | Where |
|---|---|---|---|
| Spot on an exchange | The coin (custodied by the exchange) | 1x, sometimes margin | Centralized exchanges |
| Spot in your own wallet | The coin, self-custodied | 1x | Decentralized exchanges |
| Perpetual futures ("perps") | A derivative, no coin | Up to 100x+ | Crypto derivatives venues, mostly offshore |
| Regulated futures and ETFs | A CME contract or ETF share | Built-in (futures) or 1x (ETF) | US exchanges, stock brokers |
Perpetual futures are the dominant product by volume. They never expire; instead a funding rate is paid between longs and shorts every few hours to keep the perp price near spot. They are also where most retail leverage disasters happen.
Where and when it trades
24 hours a day, 365 days a year, with no opening or closing auction, no circuit breakers, and no single order book. Each exchange has its own book and its own price; arbitrage keeps them close but not identical. Weekend liquidity is thin and large moves on Saturday night with little volume are common.
Who is on the other side
Retail is a far larger share than in any other market. Behind the retail are professional market makers, a handful of large funds, and the exchanges themselves, some of which have historically traded against their own customers. Custody is the biggest structural risk: on a centralized exchange you hold an IOU, not a coin, and if the exchange fails, that IOU may be worth nothing. Several large ones have failed. "Not your keys, not your coins" is a cliché because it has been expensive to ignore.
Regulation varies enormously by country and is changing fast; in the US, spot bitcoin and ether can be traded through regulated ETFs and CME futures, while most offshore perp venues are not legally available to US residents.
Forex and crypto side by side
| Forex | Crypto | |
|---|---|---|
| Structure | OTC, dealer network | Fragmented exchanges plus on-chain |
| Hours | Sun evening to Fri evening | 24/7/365 |
| Biggest participants | Banks, central banks, corporations | Retail, market makers, a few funds |
| Typical retail leverage | 30:1 to 50:1 (regulated) | 1x spot; 20-100x perps |
| Spread on the main product | Under 1 pip (about 0.01%) | 0.01% to 0.1% on BTC; far more on small coins |
| Main structural risk | Broker as counterparty | Exchange custody failure |
| Volatility | Low (1% is a big day for a major pair) | High (5% days are routine) |
Key idea: Forex is a low-volatility market sold with high leverage; crypto is a high-volatility market sold with even higher leverage. In both, your broker or exchange is often your counterparty and your custodian, so who they are matters more than in stocks or futures.
What a beginner should do with all this
- If you trade forex, use a regulated broker, trade the majors, size positions so a 100-pip move is survivable, and ignore anyone promising consistent daily pips.
- If you trade crypto, start with spot in small size on a reputable exchange, learn self-custody before holding meaningful amounts, and stay away from perps until you can explain a funding rate and a liquidation price without looking it up.
- In both, remember that 24-hour markets are a trap for people who cannot stop watching. The market will still be there tomorrow.
Try it: Find the current spread on EUR/USD at two different regulated forex brokers and the spread on BTC/USD at two different reputable crypto exchanges. Note how much they differ. Then find each venue's regulator, if any. You have just done more due diligence than most people who open a leveraged account.
Recap
- Forex is trading currency pairs OTC; your broker builds its own price, and is often your counterparty.
- Regulated leverage caps are 50:1 (US) or 30:1 (EU/UK); offshore brokers offer far more and produce most of the horror stories.
- Crypto trades 24/7 on many separate exchanges; perpetual futures dominate volume and carry extreme leverage.
- On a centralized crypto exchange you hold an IOU; custody failure is the biggest structural risk.
- Both markets reward small size, regulated venues, and the discipline to stop watching.
See it drawn
Original diagrams for the ideas on this page. Illustrative, not real market data.