A book forex brokers VS B book brokers, differences? | Forex Factory

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A book forex brokers VS B book brokers, differences?

  • #1
  • First Post: Nov 11, 2020 1:06am Nov 11, 2020 1:06am
Inserted Video


so in case it isn't clear there are two types of brokers, or rather brokers can operate in two modes, A book and b book, here is a broker that is a book, explaining how an A book broker makes money, and it isnt the same way that a b book broker makes money, which is off your losses, but an A book broker makes nothing when your stop loss hits, but a b booker gets all your losses plus the comms, informed traders do better, study and know your enemy, which is your b book broker, they are taking the other side of all your trades, wake up world! just the facts here
  • #2
  • Nov 11, 2020 1:24am Nov 11, 2020 1:24am
Quoting rmrf
https://youtu.be/D32tDY_e8S4 so in case it isn't clear there are two types of brokers, or rather brokers can operate in two modes, A book and b book, here is a broker that is a book, explaining how an A book broker makes money, and it isnt the same way that a b book broker makes money, which is off your losses, but an A book broker makes nothing when your stop loss hits, but a b booker gets all your losses plus the comms, informed traders do better, study and know your enemy, which is your b book broker, they are taking the other side...
Almost every decent brokerage can both A and B book. Question arises is when most retail clients orders are not large enough to be booked on the interbank.

Keen to hear if global prime addresses this and if so how?

I suspect that global prime "A-books" small sized trades via its prime broker, Gleneagles Securities. But then again, isnt Gleneagles global prime's parent company?
  • #3
  • Nov 11, 2020 1:51am Nov 11, 2020 1:51am
Quoting Bicarus
{quote} Almost every decent brokerage can both A and B book. Question arises is when most retail clients orders are not large enough to be booked on the interbank. Keen to hear if global prime addresses this and if so how? I suspect that global prime "A-books" small sized trades via its prime broker, Gleneagles Securities. But then again, isnt Gleneagles global prime's parent company?
https://www.globalprime.com/best-execution/#small

yes https://fxjunction.com/profile/rrram2/#performance my live account at Gleneagle / GlobalPrime

see the real trouble is most brokers are in b book mode 90%+ of the time, and if you start beating them in their in house casino (B BOOK), then they will profile you and switch you to a book, and back and forth from a book to b book, to jack up your bot, and make you confused, as obviously endless fills at the top in b book are bogus, and trades in a real market, where the LP, controls the spread is not the same flows...
  • #4
  • Nov 11, 2020 2:19am Nov 11, 2020 2:19am
Quoting rmrf
{quote} https://www.globalprime.com/best-execution/#small yes https://fxjunction.com/profile/rrram2/#performance my live account at Gleneagle / GlobalPrime see the real trouble is most brokers are in b book mode 90%+ of the time, and if you start beating them in their in house casino (B BOOK), then they will profile you and switch you to a book, and back and forth from a book to b book, to jack up your bot, and make you confused, as obviously endless fills at the top in b book are bogus, and trades in a real market, where the...
Due to ticket fees imposed on the execution of small trades by our prime broker, forex trades less than 50,000, XAU trades less than or equal to 30oz are executed internally by Gleneagle Securities

exactly my point, you can't call it / parade around the "A book" if your main counterpart is your non bank parent company. - wasnt this what got FXCM's Drew Niv into trouble? (FXCM executing via HF Co when they were controlled by same directors?https://financefeeds.com/fxcm-and-ce...nst-customers/)

in fact most brokers manage risk this way - internalizing and then hedge in tranches.

trust me, you'll know when you hit the interbank bedrock where trades are executed in the 7th - 9th decimal place.
  • #5
  • Nov 13, 2020 7:25am Nov 13, 2020 7:25am
Quoting Bicarus
{quote} Due to ticket fees imposed on the execution of small trades by our prime broker, forex trades less than 50,000, XAU trades less than or equal to 30oz are executed internally by Gleneagle Securities exactly my point, you can't call it / parade around the "A book" if your main counterpart is your non bank parent company. - wasnt this what got FXCM's Drew Niv into trouble? (FXCM executing via HF Co when they were controlled by same directors?https://financefeeds.com/fxcm-and-ce...nst-customers/)...
GP Au operate under their own AFSL and effectively manage Gleneagle's PB relationships. GP are still ultimately hedging the trade and still showing you who the pricing belongs to and who will be responsible when giving up the trade. Give up arrangements are specifically designed to allow batch ordering to occur, but still retain the majority of the benefits of a 1-to-1 offset [alternate give up definition]. Therefore, sending smaller individual in batches makes no difference to the trader in terms of entry/exit price. It does make a difference in terms of cost of trade. And in many cases the ability to even use PB credit facility as a whole.

This is also done in most logistical companies and even money transfer companies (legitimate batching). This transferwise article will also explain the concepts of settlement and clearing in layman's terms, which shows how full settlement isn't always instant for smaller transactions, even if the customer's account does get an instant credit.

FXCM did not disclose what they were doing. They could have completely avoided their plight by 1) not overleveraging in a pegged currency and b) disclosing their interests as needed to broker. I do think CFTC was a bit overzealous, but that's another argument for another time.
  • #6
  • Nov 13, 2020 7:30am Nov 13, 2020 7:30am
Quoting Bicarus
{quote} Almost every decent brokerage can both A and B book. Question arises is when most retail clients orders are not large enough to be booked on the interbank. Keen to hear if global prime addresses this and if so how? I suspect that global prime "A-books" small sized trades via its prime broker, Gleneagles Securities. But then again, isnt Gleneagles global prime's parent company?
The key to evaluating the counterparty risk is in the profit model. B-book model would be intentionally profiling client to lose. There is an inherent conflict of interest when a broker's profit directly = a client's loss (whether it occurs directly on broker's technology or with LP revenue share) Especially when said broker controls the entire trading platform backend, where the client funds are held, et al of that client. A more correct (trustworthy) way to market make would be to connect to a neutral exchange/ECN/MTF/etc and then your pricing and orders are accountable. Or some other guarantee regarding finality of the trades executed. So if my trade "lost" it was due solely to market forces, not because the broker decided to dishonor the deal after the fact.

Look at this 40 second video example of a rigged backend.
Attached File(s)
File Type: mp4 45904-9a4566587bac6c9e51d62e91c9c189c9.mp4   3.8 MB | 652 downloads


Watch carefully the account equity before and after the trader closes the trade.

Still don't believe platform can be manipulated? Watch a second video series:

Inserted Video


A-book model is all about transparency. More importantly, GP is showing you exactly how the trade process works (at their brokerage), including offering real post trade reports from backend. I haven't seen but maybe 1-2 other retail fx broker go through such lengths do this (openly or even privately) out of 1000 or more. In fact, there was another Au brokerage who for years was screaming "True ECN" that changed their tune quite abruptly shortly after ASIC announced consultation of proposed new CFD rules in 2019.

B-book is 100% incentivized to "kill the client" ['s deposit], using whatever tools are at their disposal. And they will not admit to anything unless you have your receipts, such as the videos above. The real problem is actually the average retail trader's mindset. They usually cannot control their gambling/greed impulses, and are in a hurry to deposit donate to the nearest/smooth-talking broker.
  • #7
  • Nov 13, 2020 9:52am Nov 13, 2020 9:52am
Octafx bloody savages
Titan Black
  • #8
  • Dec 18, 2020 9:12am Dec 18, 2020 9:12am
A Book - ECN, STP, NDD

B Book - Market Maker, Dealing Desk

In Simple :

A Book :

You profit - Broker profit (Low)
Your Lose - Broker Profit (High)

B Book :

You Profit - Broker Lose
You Lose - Broker profit
  • #9
  • Dec 19, 2020 9:01am Dec 19, 2020 9:01am
how beneficial is the market marker market? many brokers no dealing desk but can really know who they are.
  • #10
  • Dec 30, 2020 8:45am Dec 30, 2020 8:45am
Quoting shanmugaprad
A Book - ECN, STP, NDD B Book - Market Maker, Dealing Desk In Simple : A Book : You profit - Broker profit (Low) Your Lose - Broker Profit (High) B Book : You Profit - Broker Lose You Lose - Broker profit
A little bit over-simplistic. But for retail forex, it is pretty accurate unfortunately due to the mis-use of the b-book model and not having other transparent rules in place.

Quoting kavanto
how beneficial is the market marker market? many brokers no dealing desk but can really know who they are.
The same way any wholesale vs retail business is beneficial. Or any seller at a farmer's market. without someone to take the other side of trade (make a bonafide offer), there can be no contract.

The key is transparency. The goal of the marketplace is to be honest enough so that both (all) parties involved in a particular transaction can execute on an agreed definition of "fair".
Can a broker come back and unilaterally cancel a deal because they don't like it? What if the trader doesn't like the trade. Can the trader demand that the broker cancel the trade and return the account to pre-trade status?
  • #11
  • Apr 7, 2021 4:36am Apr 7, 2021 4:36am
The Seven Deadly Broker Questions - How to Tell if Your Broker is B-booking you

The following questions can be asked of your favorite broker. If your broker is honest they should be able to answer you easily.

There is an extremely high likelihood that your broker will refuse to answer you. Or they will ask why you are asking them these questions. Or they will stall you.

If you aren't able to get answers from your broker then they are HIDING something from you and the community deserves to hear about it. Run a million miles and find a broker that can actually stand by their profit models and cares about you enough to give you an honest answer to very straightforward questions.

Tip 1: Must be sent to the compliance department of your broker
Tip 2: You must demand a YES/NO answers for this to be effective.

1. Do you profile your clients into separate books (ie A book / B-book) based on their profitability? YES/NO
2. Can you categorically state that you DO NOT profit from client losses through warehousing client trades? YES/NO
3. Do you notify clients when you switch them from A to B book ? YES/NO
4. Can your clients increase their leverage without any assessment? YES/NO
5. Do you provide some form of post trade transparency to demonstrate which liquidity provider filled the clients trade? YES/NO
6. Do you allow profit share from b-book with any IBs or relationships? YES/NO
7. Are you willing to disclose how much money you earned from client losses in 2020. If yes, how much? YES/NO

so these are the questions! call your brokers compliance department on the phone, and tell them you are recording the call, and ask for permission to record the call, then ask them the questions, if you are dealing with a b book broker, I bet they wont allow you to record the call, and they wont answer your questions.

Legally they are required to answer you reasonable questions related to your agreement with them. So send the questions in writing! and see if they answer! they likely wont!
  • #12
  • Apr 8, 2021 2:23am Apr 8, 2021 2:23am
It is not “black or white” - it could be “grey”. I understand most brokers have both “A” and ”B” books.
There could be A1, A2, A3…; B1, B2, B3,….etc.
For example, a small, so called “ECN” broker, may be on a B2 book of a big player (broker).
For those clients who lose consistently - most likely will be kept on B book (new clients).
For those consistently win – either they move you to the so called “A” book (if they have one), or they find a way to kick you out, depending on their “threshold” or “tolerance”.

It doesn’t matter very much if they keep you on B or A book as long as they allow you to win big, and don't “sabotage” your trades. Big brokers have a relatively large “tolerance” and may allow you to trade big and win big. As you guys can see:

Level 1: "small" brokers provide forex trading only, no share trading (CFD); mostly like keep trades internally
Level 2: brokers provide forex and share tradings (CFD only)
Level 3: brokers providing forex and “real” share tradings (including CFD) (such as banks, IG, CMC etc.)
Which one do you prefer to trade with? Cheers.
  • #13
  • Last Post: Apr 11, 2021 9:14pm Apr 11, 2021 9:14pm
@jaspl1 check out this interview I did with Etienne from Desire to Trade, it will expand your mind a bit more with info that you may not be given elsewhere:

Inserted Video


As for who I prefer to trade with - whoever gains my trust by being honest about their profit models is the first step.

Cheers,
Jem
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