In theory, the forex markets are traded just like any other market, but there are some significant differences that need to be considered. Some of these differences are negligible, but some will make a big difference to your profit and loss, and need to be understood before the forex markets are traded.
The forex markets are not offered by any exchange (such as the CME in the US, or the DTB is Europe). They are decentralized markets, where each transaction is conducted directly between the traders involved. This would normally be fine, but without an exchange to regulate the markets, the forex markets are more vulnerable to manipulation by market makers.
Market makers are usually retail forex brokers, but in reality they are traders that set their own prices for a particular market. Market makers make their profit from the difference between the prices that they receive and the prices that they offer. This means that traders that trade with the market makers are not receiving the best available price for their trades.
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