Published on: 2025-10-23
Every trader starts with a simple goal: find a broker that plays fair. Yet behind every trade lies a crucial distinction in how brokers operate, one that can decide whether your broker profits when you win or when you lose. That difference lies between the A-Book and B-Book models. Understanding what an A-Book broker does is essential for anyone who values transparency, real market execution, and aligned interests.
In simple terms, an A-Book broker is the middleman that truly sends your trades to the open market rather than taking the opposite side. This creates a relationship built on fairness, where the broker earns only when you trade successfully and consistently, not from your losses. Let’s explore exactly how that works and why it matters.
An A-Book broker acts as a bridge between traders and the global financial market. Instead of taking the opposite side of your trade, the broker passes your orders directly to external liquidity providers such as banks, hedge funds, or institutional counterparties.
This means that your profit or loss is determined entirely by market movements, not by the broker’s internal system. The broker earns through small commissions or markups on the spread, a transparent structure that aligns its interests with yours. The more you trade successfully and frequently, the more revenue the broker generates.
In the forex and CFD industry, this execution style is often referred to as Straight Through Processing (STP) or Electronic Communication Network (ECN) trading. Both models ensure that your order interacts with the broader market, not an internal dealing desk.
A-Book execution might sound technical, but it follows a straightforward process.
You place an order. Suppose you buy EUR/USD at 1.0750.
The broker transmits it directly to a liquidity provider such as a global bank or institutional market maker.
The liquidity provider executes the trade at the best available price and sends confirmation back.
Your broker earns a commission or a tiny markup, for example, 0.2 pips, on the spread.
All this happens in milliseconds through advanced aggregation technology that pools quotes from multiple liquidity providers. The result is transparent pricing, deep liquidity, and fair order execution.
For example, if several banks quote EUR/USD between 1.0749 and 1.0751, your A-Book broker will fill your order at the best available price, possibly 1.0750, while passing the trade to the market instead of holding it internally.
A-Book brokers operate on a model built for fairness and transparency. Their defining traits include:
Market-based pricing that comes directly from institutional liquidity providers.
No dealing desk intervention or manipulation of orders.
Variable spreads that reflect real-time market conditions.
High execution speed achieved through direct server connectivity.
Aligned incentives that link the broker’s revenue to client success.
This model creates a balanced trading environment where clients receive the same pricing structure as professional institutions.
Imagine two traders, both trading the EUR/USD pair. Trader A uses an A-Book broker, while Trader B uses a B-Book broker.
When a key inflation report from the United States is released, volatility spikes. Trader A’s A-Book broker routes the trade directly to the market. The spread widens briefly due to volatility, but the execution remains fair and there is no intervention.
Trader B’s B-Book broker, however, internalises trades. When the market moves sharply, the broker may re-quote, delay, or widen spreads to protect its own position. The difference can mean missing a profitable entry or losing more during fast price changes.
Independent execution tests in 2024 showed that A-Book brokers averaged execution speeds under 30 milliseconds, while B-Book dealing desks averaged around 90 milliseconds, a meaningful gap when trading high-volatility events.
Transparent and conflict-free execution.
Real market prices that reflect actual liquidity.
No interference in trades or manipulation.
Enhanced trust, especially for algorithmic and professional traders.
Variable spreads that can widen during market shocks.
Slightly higher transaction costs due to commissions.
Slippage may occur when liquidity is thin.
In normal conditions, A-Book spreads for major forex pairs like EUR/USD range between 0.1 and 0.3 pips, widening temporarily during events such as non-farm payrolls or rate decisions.
Unlike B-Book brokers, who profit from client losses, A-Book brokers earn through two primary methods:
Commissions, for example, seven dollars per standard lot traded.
Spread markups, often around 0.1 to 0.3 pips.
This model ensures sustainability without conflict. If traders perform well and trade frequently, the broker earns a steady income stream. Over time, this fosters loyalty and transparency.
The simplest way to distinguish between A-Book and B-Book brokers is to look at who takes the other side of your trade.
A-Book: Orders are passed to the market, and the broker acts as a neutral facilitator.
B-Book: The broker internalises trades and effectively becomes your counterparty.
This distinction shapes everything from execution quality to trader psychology. In an A-Book environment, traders can trust that their results depend solely on market performance.
For example, during the 2023 US CPI release, traders using A-Book brokers experienced temporary volatility but no artificial intervention. Meanwhile, several B-Book brokers widened spreads by up to 10 pips to manage internal risk, which distorted trade outcomes.
“A-Book brokers have fixed spreads.” False. Spreads are variable and reflect live liquidity.
“A-Book brokers guarantee no slippage.” Slippage can still occur during rapid market movements.
“All regulated brokers are A-Book.” Regulation ensures compliance, but not every regulated broker follows the A-Book model.
A-Book refers to a broker model where client trades are sent directly to external liquidity providers. The broker does not take the other side of trades, ensuring fair and transparent execution.
They earn through commissions or small markups on spreads. The more clients trade, the more the broker earns, aligning both parties’ interests.
Look for “STP” or “ECN” in the broker’s account descriptions or execution policies. Regulated brokers often disclose this information publicly.
For beginners, understanding what an A-Book broker does can be the first step towards fairer, more transparent trading. It defines how your orders reach the market and whether your broker’s incentives align with yours.
Choosing an A-Book broker means prioritising execution quality, transparency, and long-term success. In a landscape where trust and technology drive performance, the A-Book model remains the industry’s benchmark for ethical trading.
Liquidity Provider: A bank or institution that supplies buy and sell quotes in the market.
Spread: The difference between the bid and ask prices.
STP (Straight Through Processing): Automated order routing to liquidity providers without manual intervention.
ECN (Electronic Communication Network): A system that connects multiple participants directly in the market.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
