A B-Book forex broker takes the other side of a customer’s trade and does not hedge externally with a liquidity provider (LP). Instead, the broker keeps the trade “in-house”, meaning it accepts 100% of the market risk of that trade.
📌 In simple terms:
✔ When a trader loses, the broker profits.
✔ When a trader wins, the broker loses.
Since taking market risk is risky, why do brokers choose to B-Book?
📌 The Key Reason: Most Retail Traders Lose
Retail forex trading is highly unprofitable for most traders.
✔ 74-89% of retail forex accounts lose money.
✔ There’s a popular industry rule called the 90/90/90 rule:
“90% of traders lose 90% of their money in 90 days.”
✔ Many retail traders lack trading experience, over-leverage, and blow their accounts quickly.
If you were a broker and you knew most customers will lose their deposits, why would you hedge their trades and give up potential profits?
B-Book brokers exploit this edge and act like a casino where the house always wins in the long run.
📌 B-Book brokers see their customers as gamblers and themselves as “the house.”
✔ Casino Example:
- If a gambler bets $100 on roulette and loses, the casino keeps $100.
- If a forex trader bets $100 on EUR/USD and loses, the broker keeps $100.
🚀 With traders losing money consistently, a B-Book broker is almost guaranteed to make money over time.
📌 How B-Book Brokers Make Money
✔ Profiting from trader losses
✔ Capturing the bid-ask spread
✔ Charging swap/rollover fees on overnight positions
✔ Offering deposit/withdrawal fees and other commissions
📊 Example: How Much Money a B-Book Broker Makes
Let’s assume:
✔ Average trader deposit: $1,000
✔ Traders lose 70% of their deposit in 12 months
| # of Customers | Total Deposits | B-Book Broker’s Profit if Traders Lose 70% |
|---|---|---|
| 100 | $100,000 | $70,000 |
| 500 | $500,000 | $350,000 |
| 1,000 | $1,000,000 | $700,000 |
| 2,000 | $2,000,000 | $1,400,000 |
| 5,000 | $5,000,000 | $3,500,000 |
| 10,000 | $10,000,000 | $7,000,000 |
🚀 Even with small trader deposits, B-Book brokers can make millions per year.
📌 Do B-Book Brokers Want Their Customers to Lose?
❌ Not necessarily.
✔ A broker wants to keep customers trading for as long as possible.
✔ If traders lose too quickly, they quit trading and stop depositing money.
✔ The broker prefers traders who trade frequently and gradually lose over time.
🔹 The ideal B-Book broker scenario:
✔ Customers keep trading (so the broker keeps making money).
✔ Traders don’t lose too fast (so they keep depositing money).
🔹 What brokers don’t like:
✔ Traders who win too much or too consistently.
✔ “Whale” traders who bet large amounts and could take down the house.
📌 What B-Book Brokers Love
✔ A large number of small traders with similar trading styles.
✔ Traders who trade frequently (so the broker captures more spread).
✔ Trades that naturally offset each other (so the broker doesn’t need to hedge).
📌 Example:
✔ Trader A buys 10,000 units of GBP/USD at 1.2505.
✔ Trader B sells 10,000 units of GBP/USD at 1.2503.
✔ The broker captures 2 pips of spread (0.0002 or $2 per micro lot).
✔ The broker doesn’t need to hedge because trades offset each other.
🚀 The more traders a broker has, the easier it is to offset positions and avoid market risk.
📌 What B-Book Brokers Hate
❌ Consistently profitable traders
✔ These traders withdraw profits, taking money away from the broker.
✔ The broker may move them to an A-Book model to hedge their trades.
❌ Traders who trade massive sizes (“whales”)
✔ If a single whale wins big, the broker could lose millions overnight.
✔ This could bankrupt the broker or force it to delay withdrawals.
📌 To manage risk, a B-Book broker may:
✔ Use a hybrid model (A-Book profitable traders, B-Book losing traders).
✔ Apply “trade restrictions” (limit lot sizes, widen spreads, or increase slippage).
📌 Are All B-Book Brokers Bad?
❌ Not necessarily.
✔ Many brokers use a hybrid model (B-Book & A-Book) for risk management.
✔ Reputable brokers run a fair B-Book and don’t manipulate trades.
However, some bad B-Book brokers may:
🚨 Manipulate spreads to make traders lose.
🚨 Delay withdrawals or refuse to pay profitable traders.
🚨 Run “stop-hunting” tactics to trigger stop losses unfairly.
🚨 Offer misleading bonuses that prevent withdrawals.
📌 Why Most Brokers Use a Hybrid Model
🚀 Pure A-Book brokers make money from commissions & spreads, but profits are lower & inconsistent.
🚀 Pure B-Book brokers make huge profits, but they risk losing too much if traders win consistently.
📌 Hybrid Model = Best of Both Worlds
✔ Retail traders who lose money = B-Booked (broker keeps the losses).
✔ Profitable traders = A-Booked (broker hedges to reduce risk).
📊 Example of Hybrid Model Risk Management
| Trader Type | Execution Model | Risk to Broker |
|---|---|---|
| New Traders (90% likely to lose money) | B-Book | Low Risk (High Profit) |
| Average Traders (50/50 win rate) | Hybrid (Mix of A/B Book) | Medium Risk |
| Consistently Profitable Traders | A-Book | High Risk (Hedged) |
✔ The broker maximizes profits from losing traders while minimizing losses from winners.
📌 Summary
✔ B-Book brokers profit when traders lose.
✔ Most retail traders lose money, making B-Book highly profitable.
✔ B-Book brokers prefer frequent traders who lose slowly over time.
✔ Profitable traders are often switched to A-Book execution.
✔ Hybrid brokers combine A-Book & B-Book to balance profits and risk.
🚨 How to protect yourself as a trader?
✔ Choose a regulated broker.
✔ Check withdrawal reviews & execution speed.
✔ Understand if your broker runs a hybrid model.
✔ Trade with solid risk management to avoid common mistakes.
💡 Want to succeed as a trader? Focus on winning consistently, so your broker is forced to A-Book your trades instead of profiting from your losses! 🚀
