traders, as well as unprofitable ones, forex brokers have software that analyses their clients' orders. The B Book - used by Market Maker brokers. This is where the distinction between the A and B book comes in, with many hybrid brokerages operating both an A and B book. It is obvious that this model generates conflicts of interest between brokers and their clients. Forex trading is different from investing in shares or futures, because a broker can choose to trade against his clients. Best of Austin 2008 Critics Picks Media. Traders are often worried that brokerages will use underhand tactics to ensure they remain profitable. Wolfson, the sound-bite world of TV news can make the on-camera talent look a little superficial, but that's just image. Traders are often worried about being subject to the underhanded tactics of some brokers who seek to always be profitable. This system used by "Dealing Desk" Market Maker brokers is known as "B booking".
Traders who are trading small accounts (statistically, smaller accounts are much less likely to be profitable). In the regulated futures contract and stock markets, all transactions are sent to an exchange that confronts buyers' and sellers' orders by sorting them according to price and time of arrival. The hybrid model, the popularity of the hybrid model is understandable, as it allows forex brokers to increase their profitability as well as their credibility.
What is the A Book and B Book that forex brokers use?
The Difference Between A Book and B Book Brokers Forex Signals
What is an A-book and B-book in Forex?
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She writes so well that she's good enough for print. When this happens brokerages turn a profit by marking up the Spread or charging their customers commission. It also enables brokers to earn money off of profitable traders by dispatching their trading orders to liquidity providers. The A-book customers trades are passed onto the brokerages liquidity providers, while others are kept on the brokerages B-book. Therefore, there are no conflicts of interest, these brokers earn the same amount of money with both winning and losing traders. Brokerage firms are able to manage the risks associated with the holding of a B Book by using certain risk management strategies: internal hedging through the matching of opposite orders submitted by other clients, spread variations, etc. The brokerage takes the other side of a customers trade which means when B-booking, a brokerages total profit can often be equal to the total losses of the trades placed on their B-book. Spot Forex differs from many other financial instruments as it is possible for the brokerage to take the other side of customer trades.