Where trading happens: exchange, broker, prop firm

When you tap “buy” on your phone, three things happen. Let's go through them in order.

1. The exchange: where everything meets

An exchange is like a huge market hall, only inside a computer. Everyone who wants to buy and everyone who wants to sell meets there. Nasdaq futures (NQ and its little brother MNQ) trade on the CME in Chicago.

You can't walk into the exchange yourself. You need a middleman.

2. The broker: your door to the exchange

A broker opens an account for you, you deposit money, and you place orders through it. The broker sends your order to the exchange and takes a small commission.

Pick a regulated broker (supervised by a financial regulator). If someone on Instagram promises you 10% a week, that is not a broker, that is a scam.

3. The prop firm: trading with their money

Most beginners don't have 20,000 € for a real account. That is why prop firms exist:

• You pay for a challenge (e.g. $100–200).
• On their test account you must hit a target without breaking the rules (e.g. a maximum daily loss).
• If you pass, they give you an account with their money. You split the profit, usually 80–90% is yours.

We'll cover prop firms in detail at level 8. For now just remember: the exchange is the market, the broker is the door, a prop firm is a way to trade someone else's money.