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. 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. If you win, your broker loses, vice versa. This simple diagram shows how your broker and B book or A book your trades.
A B book business model is a very profitable one. The statistics favour the broker significantly. Take a look at this table comparing A Book and B Book revenues. Clearly you can understand why a broker would choose to B book their clients. IG markets holds the largest B book in the world. 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: 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! 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. 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. All hybrid brokers will send the trades of their profitable traders out to their liquidity providers. When banks and other LPs receive these toxic flow, their trade rejection rates are higher. 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. They want you to win, and will support you in any way to win. Because when you win, they win too. 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. This is one of their unique selling points, which no other broker will do. 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! 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. They match orders via B book because it is cheaper. No other broker has this I believe. Pepperstone has a licence to make markets i. It is written in the fine print of their legal agreements when you open an account with them.
So best to use only the three brokers mentioned by you which only run an A book right? Yes that is correct, A book is the best. 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.
Well they introduced CFDs and Binaries now. And lower acc mins for DukasEurope. 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. ECN brokers is very likely to use B-book techniques as their device allows them to do that..
That is not exactly true. How to avoid or minimize slippage in Forex trading Abundance Trading Group. Hi Linton, what are these like in terms of being A or B book? The last three are from New Zealand. 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. By the way, all the brokers on our website do not engage in price manipulation. A book Global Prime: A book FxOpen AU: Forex Books Trading forexsoft. Books On Forex Trading forextime. Books On Forex Trading forexcamp. Forex Good Books forexsoft. Order Book Trading Forex forextips. Books About Forex Trading currencytrade.
Forex Trading Vs Options Trading forexbank. No markup on spread 4. No stop loss hunting 5. Guarantee no negative account balance. I would recommend Tickmill. However, minimum lotsize is 0. Max leverage is As for a broker that meets all your criteria.. I am currently searching for brokers that meet your criteria.
Drop me an email at linton abundancetradinggroup. Hi, Very nice and helpful article. But now I am wondering how B booking works on cTrader. 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? This is not true. Clients can be b-booked under cTrader as well. These are all old tricks of the MT4 platform, which very few brokers use nowadays. 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. 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? 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. 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?More...