What does A Book Mean When Trading Forex?

The acronyms and jargon that are part of the online forex trading industry can often create confusion and misunderstanding for those who are relatively new to the business. As seasoned industry consultants who help entrepreneurs launch their own forex brokerages, we understand the need to understand the basic concepts behind the business.

A Real Time Example of How A Book Works

Imagine a scenario where a broker receives an order to buy 100,000 of EUR/USD. In the case of an A book broker, this order would immediately be forwarded, or passed on to the liquidity provider that the broker has partnered with. So to revisit the example, if the trader places a buy order, the broker will also place the same buy order with its liquidity provider.

You may wonder how a forex broker makes money with A Book? In the case of our example, the broker will add a mark up on the spread. For example, if the spread that the broker receives for EUR/USD is .3, the broker may mark up this value to 1.3  In such a situation the broker would earn 1 point, or pip, every time their client trades EUR/USD.

How Brokers Make Money Under The A Book Model

Of course it’s rare that a broker would only have a single client so you can imagine that a broker will begin to generate significant revenue after onboarding only a handful of clients. Rather than a single trader, let’s imagine the broker had 100 clients, each trading EUR/USD 10 times a day. That would equate to 1,000 pips of revenue on a daily basis!
Launch Your Own Forex Broker Today

Launch Your Own Forex Broker Today

If you are ready to launch your own forex trading business, don’t hesitate to contact us today. We have years of experience in the forex trading industry, making us an ideal partner to help you launch your own forex trading brokerage.