About $7.5 trillion changes hands in the forex market every day, more than every stock exchange on the planet combined, and not one dollar of it crosses a trading floor or a central order book. There is no single building where EURUSD gets priced. When your platform shows 1.0850, that number is the end of a chain of quotes passed down from bank to bank to broker, and the trader clicking buy is almost always the last link in that chain, not a participant in it.
The interbank chain that actually sets the price
At the top sit the tier one banks: JPMorgan, UBS, Deutsche Bank, Citi, HSBC and a handful of others, quoting each other directly and through platforms like EBS and Reuters Matching. Their spreads on EURUSD run a fraction of a pip because the size traded is enormous and the counterparties trust each other's credit. Those banks then quote prime brokers, who quote the liquidity providers that feed retail platforms, who quote your broker, who quotes you. Every link in that chain takes a small markup, which is why the 0.6 to 1.0 pip spread you see on EURUSD at a retail broker is many times wider than the interbank price it descends from.
Credit is what actually holds this chain together. A tier one bank will only quote its tightest price to a counterparty it trusts to settle the trade, which is why smaller banks and non-bank market makers sit a rung lower, paying a slightly wider spread for the same access. Prime brokerage arrangements exist specifically to solve this: a prime broker lends its own credit standing to smaller participants so they can trade at close to interbank pricing without every counterparty needing a direct relationship with every other one. Your retail broker sits downstream of one or more of these prime relationships, and the quality of that relationship shows up directly in the spread and depth you get quoted, especially during the quieter Asia hours when fewer of those relationships are actively working.
Why the market runs 24 hours and stops on weekends
Sydney opens the trading week around 5 PM New York time on Sunday. Tokyo joins a couple hours later. London takes over near 3 AM New York time, and New York itself opens around 8 AM. Each center hands the baton to the next through overlapping hours, which is why forex never truly closes between Sunday evening and Friday evening: at any given moment, some major financial center somewhere is open and quoting. Come Friday around 5 PM New York time, the last desks wind down and the whole chain goes quiet until Sydney reopens, which is exactly why a weekend news event can produce a gap on Monday instead of a gradual move through it.
Where your order actually goes
Unlike Nasdaq or the S&P 500, there is no exchange listing forex pairs and no single central limit order book aggregating every bid and offer. Your broker either runs a dealing desk that takes the other side of your trade internally, or routes it to a pool of liquidity providers through an ECN or STP model, matching you against the best available price from that pool. Neither model is inherently dishonest, but it explains something new traders find strange: two brokers can show slightly different EURUSD prices at the same instant, because each is aggregating a different set of liquidity sources rather than reading off one shared tape.
This also explains why a stop loss can fill a pip or two away from the exact price marked on the chart. A market order in a decentralized market gets matched against whatever liquidity is actually resting at that moment across the broker's pool of providers, not against a single official print the way a stock trade fills against the exchange's own tape. In fast markets, around a data release or the first minute after London opens, that gap between the marked price and the fill can widen briefly as liquidity providers pull back and re-quote. It is a real cost of how the market is built, not a sign of a broken platform.
What the structure means for your day
Liquidity is not constant through the 24 hour cycle, and structure explains why. During the Asia session, fewer major banks are actively quoting, so spreads widen and depth thins, which is part of why EURUSD often chops in a tight range through those hours. Once London opens and New York follows a few hours later, more of the chain is awake at once, spreads compress, and the same pair that barely moved 15 pips in Asia can travel 80 in the London morning. Trading the hours when the most links in that chain are active is not a preference, it is where the liquidity actually is.