A-book or B-book: which side of your trade is the broker on?
One distinction explains more about a broker’s behaviour than any other, and almost no marketing page mentions it: what the broker does with your order after you click. It either sends the trade out to the wider market, or it keeps the trade in-house and becomes your counterparty. These are the A-book and the B-book, and knowing which one you are on tells you where the broker’s interests sit relative to yours.
A-book: the broker as a toll booth
On the A-book, your order is passed straight through to external liquidity providers, and the broker earns from a commission or a small spread markup regardless of whether you win or lose. Its incentive is simply to maximise your trading volume, because it is paid per trade, not per loss. This is the alignment most traders assume they already have, the broker profits when you are active, not when you fail.
B-book: the broker as your counterparty
On the B-book, the broker keeps your trade internally and takes the other side. Your loss is its revenue and your profit is its cost. Firms run this model because retail accounts lose money in aggregate, so warehousing the flow is profitable, and, done honestly, it lets a broker offer tighter pricing on small trades it never needs to hedge. The catch is the conflict: on the B-book, a broker that behaves badly has a direct financial reason to want your trades to fail, which is where slippage and requotes stop looking like bad luck.
The hybrid reality
Almost every real broker runs a hybrid. It profiles its clients and routes the consistent losers to the B-book while passing reliably profitable traders, the ones expensive to be counterparty to, out to the A-book. This is why some traders report their execution mysteriously worsening exactly as they become profitable: they have been re-classified. It is not paranoia; it is a standard risk-management practice that most firms simply never advertise.
How to tell, and why it matters
No broker is obliged to label your account, but the tells are there: the words STP, ECN or DMA suggest A-book routing; a pure market-maker is running a book. Watch how fills behave on size and around events, because the games played around news look very different depending on which side the broker is on. A B-book is not automatically a scam and an A-book is not automatically safe, but you should always know which incentive you are trading against. This is educational information, not financial advice; ask your broker directly how it handles your orders.