The forex market is structured differently from others, notably its most popular peer: the stock market. The main difference is that it’s not centralized; that is, forex traders don’t have to go through a single central exchange (such as the New York Stock Exchange) in order to trade, and there’s no single entity that controls prices. This is the case with the stock market, which is why it’s prone to monopolist control. This is one of the reasons traders make the switch from the stock market to forex, although both have their benefits.

The advantage to a decentralized structure such as forex is that you can transact directly with buyers and sellers. Although brokers act as middlemen, they’re part of the organism—there’s no single broker that everyone has to go through in order to trade. Forex traders therefore have more choices and more control—but also a lot more thinking to do. That’s the catch. With so many options on the shelf, it’s easy to make bad decisions and a hit-or-miss approach can be costly.

How does the forex market, with so many players spread across so many cities, stay as organized as it is? The secret is something called the FX ladder, which is basically a hierarchy of players. Sitting on top is a collection of the world’s largest banks and a few smaller ones, known as the interbank market. These banks deal directly with each other, most commonly through the Reuters Dealing 3000-Spot Matching system or Electronic Brokering Service (EBS). Rates from these banks are dictated largely by their credit relationships: the better a bank’s credit standing is, the better the deals they get.

Just below the big banks are other financial institutions, including corporations, hedge funds, and electronic communication networks (ECNs)—computer systems that facilitate trade outside of the stock market. Unlike the interbank market, they aren’t credit-dependent, and they transact mainly on commercial banks. As a result, their rates tend to be a little higher.

At the bottom are retail traders, which includes individuals. Before the Internet, traders in this block had a lot of trouble accessing the forex market. Electronic trading has allowed a larger range of traders to join the game, and created a market that’s strong enough to be in the ladder. The higher-ups may seem hard to reach, but the beauty of the forex market structure is that it allows you to play the same game and, if you play your cards right, enjoy the same advantages as a major player.