6/25 (Tue) About A Book and B Book
EA developer's Reiwa double-E is here.
Today I will explain about “A Book and B Book.”
Roughly speaking, the way trades are executed between traders and FX brokers differs.
【About A Book】
A Book means
that the broker flows the trader’s orders directly to the LP (Liquidity Provider),
and the broker profits from the markup added to the spread and any external trading fees.
In other words, an A Book broker does not have a conflict of interest with the trader,
and it benefits the company if the trader makes money and increases lot size and trading frequency.
However,
because orders are directly linked to the LP, the execution price after placing an order can slip,
and spreads can widen in some cases.
【About B Book】
B Book means
that the broker takes the trader’s orders, processes them,
and holds the opposite position to the trader,
(sometimes profitable traders’ orders are passed on to the LP as well)
This is because
in FX, there are more losers than winners,
and the broker profits by taking the opposite side of trades.
In other words, a B Book broker has a conflict of interest with the trader,
and in the past, when EA trading was too profitable, brokers could not absorb all the profits,
leading to accounts where EA usage was restricted or forbidden.
Also, getting too successful could lead to being barred.
However,
the spreads are typically fixed or narrow, with little fluctuation among many FX brokers.
Therefore,
The ideal is to understand the distinct characteristics of both A Book and B Book and use them to your advantage.For example, try using a B Book for scalping EAs that seem to have low spread tolerance,
and use an A Book for trend-following or swing-type strategies that tend to have spread tolerance,
there are various ways to operate this way.
See you!
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【Reiwa’s Double-E EA Listing】
https://www.gogojungle.co.jp/users/112481/products
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【Reiwa’s Double-E’s Serialized Articles】
https://www.gogojungle.co.jp/finance/navi/series/1700
https://www.gogojungle.co.jp/finance/navi/articles/64703
https://www.gogojungle.co.jp/finance/navi/articles/64738
https://www.gogojungle.co.jp/finance/navi/articles/65619
https://www.gogojungle.co.jp/finance/navi/series/1714
https://www.gogojungle.co.jp/finance/navi/series/1701
https://www.gogojungle.co.jp/finance/navi/articles/64723
https://www.gogojungle.co.jp/finance/navi/series/610
【Reiwa’s Double-E’s Beliefs】
