TradingAdvanced#Brokers#Execution
A-Book vs B-Book
A
Definition
A-Book brokers pass trades to external liquidity; B-Book brokers take the opposite side of the client's trade.
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Concept Diagram
Key Takeaways
1
A-Book brokers route trades directly to the market making money on commissions not trader losses
2
B-Book brokers take the opposite side of trades profiting when their clients lose money
3
B-Book creates a conflict of interest where the broker benefits from your trading losses
4
Professional traders always verify whether their broker uses A-Book or B-Book execution
Practical Example
You buy 1 BTC at $60K. An A-Book broker routes your order to the real market. A B-Book broker internally holds the other side — if BTC drops to $55K, they profit $5K from your loss. This is why B-Book brokers may manipulate spreads or trigger stops.
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Related Terms
Trading
Prop Firm (Proprietary Trading Firm)A company that provides traders with capital to trade in exchange for a profit split, usually after passing a challenge.
Trading
Wash TradingA form of market manipulation where an entity simultaneously buys and sells the same asset to create fake volume/activity.
Trading
Order Flow ToxicityA condition where informed traders (like hedge funds) trade against market makers, causing the latter to lose money consistently.
Trading
SlippageThe difference between the expected price of a trade and the actual price at which the trade is executed due to low liquidity.
Market Structure
Wash TradingThe illegal practice of trading with oneself to create fake volume and artificial price movement, misleading other traders about real market demand.
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