Chapter 1 of 6: What a market actually is
Chapter 1 of 6
What a market actually is
Price is the last agreed deal between a buyer and a seller. Everything else follows from that.
A market is a place where buyers and sellers agree on a price. Every candle on your chart is a record of those agreements over a period of time. When more people want to buy than sell at the current price, buyers have to pay more to get filled, and price rises. When sellers are more eager, price falls.
That is the whole mechanism. News, earnings, interest rates and social media only matter because they change how eager buyers and sellers are.
The markets you can trade
| Market | What you trade | Typical hours |
|---|---|---|
| Stocks | Shares in a company | Exchange hours, plus pre and post market |
| Forex | One currency against another | 24 hours, Monday to Friday |
| Crypto | Digital assets | 24 hours, 7 days |
| Futures | Contracts on indices, commodities, rates | Nearly 24 hours, Sunday to Friday |
Each has its own rhythm. Forex is most active when London and New York overlap. US stocks move most in the first and last hour of the session. Crypto never closes, so weekend moves are common and liquidity can be thin.
Liquidity and spread
Liquidity is how easily you can buy or sell without moving the price. Large stocks, major currency pairs and Bitcoin are liquid. Small coins and thinly traded stocks are not.
The spread is the gap between the best price a buyer will pay (the bid) and the best price a seller will accept (the ask). You pay the spread every time you trade. In liquid markets it is tiny. In illiquid markets it can be larger than the move you are trying to catch.
If you are new, stick to liquid markets. Your entries and exits will fill closer to where you expect, and the chart will be cleaner.
Key takeaways
- Price moves because the balance between buyers and sellers changes
- Each market has its own hours and its own most active periods
- Liquid markets have tighter spreads and cleaner fills
Check your understanding
Why does price rise?
Educational content only, not financial advice. Trading involves risk and you can lose money. Indicators describe market conditions, they do not predict outcomes.