📊 Course 2. Forex Market Structure
Understand the institutional framework of the forex market: who moves prices, when, and why. 6 lessons to see the market from a professional perspective.
The forex market hierarchy
The forex market is not a single exchange – it's a decentralized network of participants arranged in a clear hierarchy.
🏛️ Tier 1: Interbank market
The top tier consists of the largest global banks (Citibank, JP Morgan, Deutsche Bank, etc.). They trade directly with each other using electronic brokering systems like EBS and Reuters Dealing. Spreads are extremely tight, and transaction sizes are in millions.
🔁 Tier 2: Liquidity providers & prime brokers
Smaller banks, hedge funds, and large corporations access the interbank through prime brokers. They aggregate liquidity and offer it to the next tier. At this level, we start seeing retail brokers' counterparties.
🌐 Tier 3: ECN/STP brokers & retail traders
ECN and STP brokers connect retail traders to the liquidity pool. They aggregate quotes from multiple LPs and show the best bid/ask. Retail traders (us) are at the bottom – we take prices, we don't set them.
📊 Why this matters
Knowing who is above you helps you understand that price moves are driven by massive institutional flows. Your small order won't move the market – but you can learn to ride the waves created by the big players.
Major players: central banks & institutions
Central banks (Fed, ECB, BOJ, BOE, etc.) control monetary policy. They intervene to stabilize currency or achieve economic goals. Their words move markets instantly.
Hedge funds & asset managers trade large volumes based on macro analysis. They often follow trends and can sustain prolonged moves.
Commercial banks facilitate client flows and also speculate. They are the main liquidity providers.
Market sessions & liquidity
Forex trades 24h a day, but not all hours are equal.
- Asian session (Tokyo): JPY pairs active, generally lower volatility.
- European session (London): 30-40% of total volume, major moves begin.
- US session (New York): overlaps with London for 4h – highest liquidity, best trading opportunities.
During overlaps, spreads tighten, and price reacts to news from both regions. Many professional traders focus on these windows.
Price action & market structure
Market structure is the framework of swings: higher highs (HH), higher lows (HL) for uptrend; lower highs (LH), lower lows (LL) for downtrend.
Break of structure (BOS) occurs when price takes out a previous high/low, signaling trend continuation or reversal. Change of character (CHoCH) happens when an uptrend starts making lower lows – a warning.
Support, resistance & order blocks
Support/resistance are price levels where reversals often happen. They can be horizontal or diagonal (trendlines).
Order blocks are institutional zones where large players have placed (or withdrawn) massive orders. They appear as strong candles with little wick, often the last pullback before a strong move. In ICT/SMC methodology, these are "fair value gaps" or "breaker blocks".
Combining structure (trend) with key levels increases probability.
Putting it together: structure-based trading
Let's combine everything into a simple framework:
- Identify trend using HH/HL or LH/LL on higher timeframe (H4/D1).
- Mark key levels (support/resistance, order blocks, previous highs/lows).
- Wait for price to reach a level that aligns with the trend (e.g., pullback to support in uptrend).
- Look for confirmation (candlestick pattern, break of internal structure).
- Place stop beyond the level, target next structure point (previous high/low).
Always consider session timing and recent news. The structure is your map, but the market is alive.