What is A book vs B book in Forex trading?

By | April 27, 2014

What is A Book vs B book in Forex trading?

Forex is different from equities or futures trading because your broker can choose to trade against you. This is known as B booking. When your broker sends all your trades to the real market or their liquidity providers, this is known as A Booking.

In futures or equities trading, all your trades are sent to the exchange and matched with other buyers or sellers.

In Forex, your broker can keep your trades ‘in house’. This means that your trades are not sent to the real market. Instead, your broker bets against you, taking the other side of the trade.

For example, if you were to buy 1 lot of EURUSD at 1.35000, then your broker would be selling 1 lot of EURUSD 1.35000. If you win, your broker loses, vice versa.

what-is-a-book-and-b-book-forex-trading

This simple diagram shows how your broker and B book or A book your trades

Why do Forex brokers B book?

A B book business model is a very profitable one. Statistics says that 90% of traders lose their deposits within 6 months. The statistics favour the broker significantly.

Take a look at this table comparing A Book and B Book revenues

Clients 100
Average deposit size $1,000
Total deposit size $100,000
Trade size (lots) per client 0.1
Trading days in a month 20
Trades per day 3
Total monthly volume (lots) 200
Commission earned per lot $7 
A BOOK B BOOK
Total revenue from commissions Clients lose 10% deposit in 1 month
Total monthly volume*commission per lot 10%*Total deposit size
$4,200 $10,000

Clearly you can understand why a broker would choose to B book their clients.

Note: The losing rate of traders drops significantly for deposit sizes above $10,000, which is why some A-book brokerages prefer to have a minimum deposit of $10,000

Fact: IG markets holds the largest B book in the world

———————————————————————————————————————————————————————

Increasing the profitability of the B book model – Hybrid Model

what-is-a-book-and-b-book-forex-trading

Yes, the B book model’s profitability can be increased even further!

What if we could identify those 10% of traders who are profitable and send their trades to the real market, while we keep the other 90% of losing trades?

This is called the hybrid model and it is a very popular model adopted by many of the large and popular Forex brokerages today. The challenge lies in correctly identifying losing and winning traders.

There are trade analysis software out there which can predict whether a trader is worth B booking.

Certain tell tale signs include:

  • Maxing out of leverage,
  • Risking more than 10% of account balance per trade
  • No stop loss
  • Deposit size less than $10,000. 

———————————————————————————————————————————————————————

Pros and Cons of a B book broker

what-is-a-book-and-b-book-forex-trading

So what are the pros and cons of trading with a b book broker?

Well, if your Forex broker purely B books you, without giving you slippage, then it is actually good for you! You can deploy strategies that won’t work on A book brokers such as news trading. 

This is because in an A book broker, if you were to place a buy and sell stop just before the news, hoping for a breakout in either direction, you will receive a lot of slippage, because there is simply no liquidity to fill your trade during news.

In a B book broker, there is ‘unlimited liquidity’, hence whatever price you want to be filled at, the broker will ‘make a market’ for you, and fill you at the price you want. As a result, there is zero slippage, and news breakouts can be very profitable. 

However, B book brokers today will simulate your fill against the real market, and B book you. This means that your trade is filled as if it were to be trading on an A book (with slippage), but instead of sending your trades out to their liquidity providers, they keep your trades in house.

This way, they get the best of both worlds. You receive the slippage, and they bet against you.

———————————————————————————————————————————————————————

Advantage of A book brokers

what-is-a-book-and-b-book-forex-trading

Liquidity providers don’t like toxic flow from hybrid or B book brokers

All hybrid brokers will send the trades of their profitable traders out to their liquidity providers. This flow is known as ‘toxic flow’, because these are profitable traders and no one wants to bet against them correct?

When banks and other LPs receive these toxic flow, their trade rejection rates are higher. Some of your trades will be rejected by the banks or LPs (known as ‘last look’) and you will receive a worse price, because you will be filled at the next best price.

The good news is that none of this is relevant when trading with a purely A book broker. Liquidity providers like the balanced flow of an A book broker and they are much less likely to reject your trades. This means you get better fills at the prices you want.

———————————————————————————————————————————————————————

Brokers that are pure A book

Global-Prime-Rebates

Logically speaking, it would be good to trade with brokers that are ‘on your side’ isn’t it? They want you to win, and will support you in any way to win. Because when you win, they win too. This means they don’t play tricks on you, such as slippages, requotes, or delay your trade execution times.

  • One of the pure A book brokers I’ve encountered is Global Prime Australia. How do I know?

Global Prime is able to show you the liquidity receipt for every single one of your trades. Just drop Jeremy from Global prime an email (jeremy.k@globalprime.com.au) with your trade ticket number. This is one of their unique selling points, which no other broker will do. 

———————————————————————————————————————————————————————

If you’re interested in trading with Pure A book brokers

what-is-a-book-and-b-book-trading

If you’re interested in trading with Global Prime, I’m glad to say that Abundance Trading Group is able to help reduce your trading costs through providing you with discounted commissions rates.

Global Prime – $5.50 discounted commissions instead of $7 per rt.

If you are interested in the discounted commission rates, please visit the following page for more information on how to register:

I hope this article has truly benefited you! I truly enjoyed writing it and tweaking this article to be as beneficial as possible! May you benefit greatly from it!

———————————————————————————————————————————————————————

98 thoughts on “What is A book vs B book in Forex trading?

    1. Linton Post author

      Yup Mick, you’re absolutely right. CFDs is 100% B booking, unless your broker decides to pass off your CFD risk to other liquidity providers, like LMAX.

      LMAX would purely act as an exchange between CFD liquidity providers and the trader.

      In Singapore, I speculate that most brokerages that allow CFD trading mostly B book CFD traders

      Reply
  1. Steve

    So no matter where we trade, there area alway got someone is trading against us ???

    Reply
    1. Linton Post author

      Yes exactly. If you trade in a stock exchange, there must be another seller for you to buy.

      In Forex, it is the same principle. It is just whether your broker trades against you, or they pass your trades on to the liquidity providers

      Reply
  2. Gianluca

    Which of the below brokers are A, B or A+B (hybrid)?
    AxiTrader
    Solidary Markets Fx (Axi feed)
    Excel Markets
    Liquid Markets UK (they stopped the CY operations recently)
    3TG
    Pepperstone
    SpediaFX
    FxOpen
    FXCM
    AAAFx
    ThinkForex
    HotForex
    FxPrimus
    Ic Markets
    Vantage Fx
    Divisa Capital

    Sorry it is quite a list. Could you also mention if they have a B license?

    Reply
    1. Linton Post author

      Hi Giancula,

      Which of the below brokers are A, B or A+B (hybrid)?
      AxiTrader (A+B)
      Solidary Markets Fx (Axi feed) (not sure)
      Excel Markets (not sure)
      Liquid Markets UK (they stopped the CY operations recently)(not sure but I suspect A+B)
      3TG (not sure)
      Pepperstone (A+B)
      SpediaFX (not sure)
      FxOpen (I speculate, B book but they only use it for order matching purposes. They don’t take positions against their clients. They match orders via B book because it is cheaper. They don’t have to send the trades to their LPs which costs money. If trader A wants to buy 1mil EURUSD at 1.35 and trader B wants to sell 1mil EURUSD at 1.35, instead of sending both orders to LPs and incur LP charges, why not match them both via a B book instead? they can do this because their proprietary MT4 bridge and ECN order matching software allows them to do so. No other broker has this I believe.)
      FXCM (I speculate A+B…they have cheated their clients so many times..why would you trade with them…?)
      AAAFx (not sure)
      ThinkForex (not sure)
      HotForex (not sure)
      FxPrimus (A+B ..their fixed spread account is B book)
      Ic Markets (A book)
      Vantage Fx (not sure)
      Divisa Capital (I have traded with them before, but I’m not sure)

      Sorry it is quite a list. Could you also mention if they have a B license?

      Pepperstone has a licence to make markets (i.e. take positions against you) The rest I’m not sure. It is written in the fine print of their legal agreements when you open an account with them.

      Reply
      1. Gianluca

        Thanks Linton!
        So best to use only the three brokers mentioned by you which only run an A book right?

        Reply
        1. Linton Post author

          Hi Gianluca,

          Yes that is correct, A book is the best. However, A+B book (hybrid) is also fine, so long as they don’t mess with your trades. Such as give asymetric slippage (means give negative slippage, but keep all the positive ones to themselves), or intentionally delay your trades using virtual dealer plugin.

          I trade with Axitrader, IC markets, Global prime and Tickmill

          Reply
    2. Yoke Loon Lo

      Axitrader is hybrid, thus you do not know when you will be A-booked or B-booked

      Reply
      1. pat

        Well they introduced CFDs and Binaries now. And lower acc mins for DukasEurope. I suspect that they are A+B now.

        Reply
  3. Adedayo

    Thanks for this eye opening article but what about blackwell global,the alparis & magnatis finance known as MFI.

    Reply
    1. Linton Post author

      Blackwell Global is A book, For Alpari on their classic accounts it is pure B book. Alpari’s PRO account is pure A book.

      I am not sure about magnatis finance as I have not heard of them before. I think it would be better if you go with brokers who do not have a licence to B book such as Sensus Capital.

      Reply
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  6. Jeffrey

    Hotforex is definitely A-book broker as it has STP execution, which means they just transfer orders to LPs. ECN brokers is very likely to use B-book techniques as their device allows them to do that..

    Reply
    1. Linton

      Hi Jeff,

      That is not exactly true. As long as a broker STPs 1% of their client’s trades (hedges 1% of their clients trades with the LPs), they are allowed to call themselves an STP broker.

      Reply
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  8. Jacob

    Hi Linton, what are these like in terms of being A or B book?
    CLM forex(Core Liquidity Markets au),
    DirectFx au,
    Citifx au,
    Armada,
    Pacific Financial Derivatives(PFD),
    GDMFx
    FXPig. The last three are from New Zealand.

    Sorry about the long list.

    Reply
    1. Linton

      Hi Jacob D. Vils,

      CLM forex – Hybrid (a & b book) – read their product disclosure here: https://clmforex.com/wp-content/uploads/2013/04/Core_Liquidity_PDS_Margin_FX-1.pdf

      We may not hedge a client’s position or post the trade
      “straight through” (known as Straight through
      Processing, or STP) and instead, we set the prices at
      which we are prepared to deal with you. In some
      cases, client trades are “hedged” by passing the
      equivalent volume of instrument traded through to a
      liquidity partner, thereby mitigating client risk
      resulting from adverse market movements

      DirectFx AU – A book
      Citifx AU – hybrid
      Armada – A book
      PFD – hybrid
      GDMFx – B book – http://www.gdmfx.com/gdmfx-order-execution-policy
      “GDMFX will act as the principle for all orders submitted by the client. ” only when they act as the Agent, then they are not b booking
      FxPig – A book

      Reply
    2. Linton Post author

      Hi Jacob,

      You can find out whether they are A or B book usually by reading the fine print of the customer / legal agreements on their website

      Best regards,

      Reply
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  17. Sutivserv

    I understand that stoploss and take profit EA can be used to hide your stoploss and take profit target from price manipulation from B book broker. How does it work, can you elaborate on this.

    Reply
    1. Linton

      The EA remembers your SL & TP price internally, and closes your trade when it reaches the specific SL or TP level. It doesn’t send the SL or TP prices to your broker.

      By the way, all the brokers on our website do not engage in price manipulation. You should give them a try if you are stuck with a broker that hunts your SL & TP

      Reply
  18. Sutivserv

    I’m happy to hear that the brokers in your website do not gauge in price manipulation. Please can you list them especially the A book and (A+B) hybrids.

    Reply
    1. Linton

      Hi Sutivserv,

      Axitrader: A+B book
      IC Markets: A book
      Global Prime: A book
      Tickmill: A book
      SynergyFX: A book
      FxOpen AU: A book
      LMAX: A book
      Sensus: A book
      FinFX: A book

      Reply
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  27. Sutivserv

    Please can you recommend any true ECN/STP brokers that have the following attribute:
    1. Maximum leverage: 100:1
    2. Minimum Lot size: 0.1
    3. No markup on spread
    4. No stop loss hunting
    5. No slippage
    6. No re-quoting
    7. low commission
    8. low swap
    9. Guarantee no negative account balance

    Reply
    1. Linton

      Hi Sutiserv,

      1. Maximum leverage: 100:1
      2. Minimum Lot size: 0.1
      3. No markup on spread
      4. No stop loss hunting
      5. No slippage
      6. No re-quoting
      7. low commission
      8. low swap
      9. Guarantee no negative account balance

      I would recommend Tickmill. They:
      1. guarantee no negative account balances.
      2. They have *low slippage* (not no slippage, not possible)
      3. no requotes
      4. low commission 3.8 per rt after Abundance Trading Group discount
      5. no markup on spread
      6. no stop loss hunting
      7. However, minimum lotsize is 0.01, not 0.1.
      8. Max leverage is 500:1 not 100:1, however, this can be adjusted to 100:1

      As for a broker that meets all your criteria..this is the closest so far. I am currently searching for brokers that meet your criteria. Drop me an email at linton@abundancetradinggroup.com and I can keep you updated.

      Reply
  28. Kei

    Hi,
    Very nice and helpful article.
    But now I am wondering how B booking works on cTrader.
    Traders expect that there is no conflict of interest between brokers and traders on cTrader but Spotware, developer of cTrader publishes the article that tells A/B booking feature exists.
    I also saw the screenshot of cBroker(provided by IC Markets) that shows clients are grouped in B book.
    How does this work?
    There is no disadvantage to be categorized in B book in this case?

    Thanks.

    Reply
    1. Linton

      Hi Kei,

      Good question.

      “Traders expect that there is no conflict of interest between brokers and traders on cTrader but Spotware, developer of cTrader publishes the article that tells A/B booking feature exists.”

      This is not true. Clients can be b-booked under cTrader as well. However, using the cTrader platform, the broker cannot intervene in the client’s trading i.e. cause slippage, delay trade execution. These are all old tricks (2007-2010) of the MT4 platform, which very few brokers use nowadays.

      In cTrader’s website it says: Dealing desk intervention is impossible, guaranteeing you a level trading field that helps you reach your trading goals.

      By that, they mean that the broker cannot intervene in the execution of your trades. However, they can still take the other side of your trade (B book). Still I feel there is no cause for concern. To me, as long as the broker cannot intervene in my trades, it doesn’t matter which side he is on (A or b book).,

      Linton

      Reply
      1. Kei

        Hi Linton,

        But now I’m wondering who the counter-party is.
        If the broker takes the other side of traders positions are their trades filled in house?
        Or all trades are filled in ECN even if traders are b-booked and in addition brokers place orders for their own profit?

        Thanks.
        Kei

        Reply
        1. Linton

          To be honest and I not sure of the right answer and can only make a good guess. My guess is that trades are filled via ecn and then the broker opens addition positions. Because, if the trades were filled inhouse, you would not receive any slippage. Still I dont think this seems correct. There should be another way where the broker can B book you while simulating real life fill conditions

          Reply
  29. Sutivserv

    What is the main difference between Dukascopy Bank SA and Dukascopy EU?

    Reply
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  31. jajang

    hy.. i losse very much in forex trading i use broker from rusian n cyprus belize, when i trade i alwaus losse.. they stop hunting. n if i no sl they pushing me until i blown my acount. after that the price back to my prediction is always happen to me. my questiob how to avoid this market maker? is there any time they cant trade again us? in news release?? coz in regular hour imposible we win coz they trade again us. thanks

    Reply
    1. Linton

      Hi Jajang,

      You can try Global prime Australia, they are a broker that definitely doesn’t trade against you because they provide you the liquidity provider receipts of the LP who filled your trade.

      Regards,
      Linton

      Reply
      1. Tshepo

        hi Linton,

        i was just wondering if you can please help me. i’m looking for a good broker and i see that you with AxiTrader,
        what i would like to know is that, with all the knowledge you have on brokers, what made AxiTrader stand out for you.

        i’m currently with a broker called Capital Index and i’ve lost $5000 with them. i now that i know i’m good trader, however overtime i take a trade i always get stopped out no matter how deep may stop loss may be.

        is Capital Index a B Book broker and have they been stealing from me all this time.

        would really appreciate you input and advise.

        regards
        Tshepo

        Reply
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  33. johnzoe

    dear linton,
    so good to bump on your writing, really appreciate it my friend.
    I consider between global prime and dukascopy, and wondering, since the commision of global prime quite high.
    Whats different between dukascopy Swiss and dukascopy Euro?
    Thanks linton

    Reply
    1. Linton

      Hey there johnzoe,

      Thanks for dropping by! Global Prime’s commissions are actually cheaper than Ducascopy’s commissions (After abundance trading group’s discount: http://www.abundancetradinggroup.com/global-prime-rebates/ @ USD5.50 per rt). In order to get the same commission rate of $5.50 at ducascopy, one has to deposit >25,000 USD. Global Prime’s minimum deposit is USD$500.

      On to the differences…both Global Prime and Ducascopy provide traders liquidity via ECN. This is good. Ducascopy is marketplace model (like stock exchange), where traders can see their own bids and offers in the depth of market (when they place a limit order), while bids and offers (limit orders) @ Global Prime are executed as a market order when the price is triggered.

      Global prime offers liquidity receipts to traders to show them they who was the liquidity provider who filled their trade. This is to show the trader that Global Prime isn’t trading against them (b book).

      Ducascopy unfortunately does not have such a service.

      I hope this explanation works for you 🙂

      Best regards,
      Linton

      Reply
  34. steve Teunis

    Hi there, I am a late arrival here.
    I am looking at opening an account with INVAST (Sydney office). Looks like a descent firm on the surface. Do you have an opinion? Cheers.

    Reply
    1. Linton

      Hey Steve, never too late!

      It’s indeed a decent firm. (conversed with them over email before). One of the advantages is you can trade DMA equities CFD together with Forex too (not on MT4 I think, but on their proprietary platform).

      I think you’re in good hands Steve. Best of luck!

      Linton

      Reply
      1. steve Teunis

        Cheers Linton.
        The spreads are very reasonable and commission is very attractive at $35 per million round trip.
        By the way I love Singapore, I was there a few weeks ago visiting a fund manager friend based in Singapore.
        Cheers,
        Steve

        Reply
        1. Linton

          I feel fortunate to reside in Singapore too. Glad you could come by and experience my country for a short visit 🙂

          PS: We also offer discounted commissions @ 27.5 per million for Global Prime (Equally reputable pure A-book, Aussie broker as well). Since you’re with Invast, you’re also in good hands. If in the future you would like the 27.5 per mil rate, just let me know or visit this page: http://www.abundancetradinggroup.com/global-prime-rebates/

          Best wishes,
          Linton

          Reply
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  36. Papaye

    Hi Linton

    Your website is great interesting, Thanks for all these precious informations…

    Below, are they A or B book, please?

    Vipro Markets
    Fxfinpro Capital
    JFD Brokers
    One Trade
    KEY to Markets
    Axiory Eu
    Solforex
    Synergy Fx

    Sorry the list is long…

    Did you really try them all or you just checked their licenses?

    Thanks a lot for your responses and help.

    Papaye

    Reply
    1. Linton Post author

      Synergy FX is A book

      For the other brokers, you will be able to find out by checking through their customer agreements or legal documents on their website.

      Best regards,

      Reply
  37. AGHOLOR RAPHAEL O.

    Thanks, Linton, for the valuable services you are providing us private fx traders.
    Please, I would like to ask, where can I get to buy a Stop Loss/Take Profit EA (or stealth EA)? I have been trading for many years, and I have not seen a broker who does not hunt SL.

    Second question: does Ducascopy now use mt4? That has been the reason I
    could not sign up with them a couple of years ago.

    looking forward to your professional reply.

    ONYEKA R.

    Reply
    1. Linton

      Hi Onyeka,

      Apologies for seeing your message so late.

      You can get a stop loss or TP stealth EA here: https://www.ea-coder.com/stealth-ea/

      However, to be honest with you, all the brokers on my website do not hunt stop loss. You can consider opening a free account with them.

      Ducascopy still does not offer MT4, but they provide a third party bridge to use MT4 to connect to their Jforex platform.

      Best regards,

      Reply
    1. Linton

      Hi saren,

      Apologies for missing out on your message.

      Instaforex is most likely B book, and they will send their consistently profitable clients to A book.

      In Asia, Global prime Forex is A book. IC Markets is A book too

      Best regards,

      Reply
  38. Rizal

    Hi Linton,
    How to know the broker is an A Book or B Book?

    Thanks for your answer.

    Reply
    1. Linton

      Hi Rizal,

      Apologies for missing out on your question earlier,

      Usually if the broker doesn’t advertise they are A book (like Global Prime), they are not pure A book.

      Best regards

      Reply
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  41. Bezousek

    Hi Linton,
    what about Purple Trading former Axiory broker? Admiral markets? Lynx?
    They all seems to have pure ecn model but behind I still think of A+B.
    Thanks for your opinion.

    Reply
    1. Linton

      Hi Bezousek,

      I believe these brokers are not pure A book, because if they were, they would proudly advertise it, like Global Prime

      Best regards,

      Reply
  42. Hari

    Hi Linton, many thanks for sharing broker types.
    I have another few brokers, could you please let me know are they A or B types?
    JustForex
    ICM Capital
    FBS Inc
    InstaForex
    Trade24
    Ateios Capital (UK Regulated)

    Thanks

    Reply
    1. Linton

      Hey Hari,

      I believe all of them are B book, and they run an A book for those profitable clients, so they don’t lose money trading against you.

      You would be better off trading with A book brokers like Global prime.

      Just to be doubly sure, you can read their legal documentations on their website, the one most people ticked that they read the terms and conditions of the agreement when they signed up for the broker. In there, it will usually say whether the broker can trade against you or not.

      Best regards,
      Linton

      Reply
  43. Moe

    i’m currently with a broker called Capital Index and i’ve lost $5000 with them.

    is Capital Index a B Book broker and have they been stealing from me all this time.

    Can spredbetting be stp.or only cfd

    Reply
    1. Linton

      Hi Moe,

      I believe capital index is a B book broker. Usually spread betting brokers are B book or hybrid model

      Maybe you should give global prime a try!

      Best regards,
      Linton

      Reply
  44. Moe

    I have been looking at your website very good. On there website they say pure STP. I paid for education 10k through them with learn to trade. They say they will give 50k funded account so if it’s b book that’s wrong. It meens they teach me wrong info.

    Can spredbetting be A book or imposible?

    Reply
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