A-Book vs B-Book: Forex Broker Risk Models & Liquidity Explained
A-book, B-book, or hybrid? Your risk model defines how you make money and how much risk you carry. Here's how each works and when to use it.
Every forex broker has to answer one foundational question: what happens to a client's trade after they click buy? The answer is your risk model, and it shapes everything from your revenue to your regulatory profile. The three options — A-book, B-book, and hybrid — are simpler than the jargon suggests.
A-book: pass the trade through
In an A-book model, the broker passes client orders straight through to a liquidity provider. The broker is an intermediary, earning revenue from the spread markup or a commission rather than from client losses. Because client trades are hedged externally, the broker carries little market risk — but margins per trade are thinner and depend on volume.
B-book: internalize the flow
In a B-book model, the broker takes the other side of client trades internally rather than routing them out. When a client loses, the broker keeps the difference; when a client wins, the broker pays it. This can be highly profitable — most retail traders lose over time — but it concentrates market risk on the broker's own book, which can be dangerous during sharp market moves.
Hybrid: the model most brokers actually run
In practice, most established brokers run a hybrid book. They classify flow and route it accordingly:
- Consistently profitable or large clients are A-booked to hedge their risk
- Smaller, retail-style flow is B-booked to capture the spread and statistical edge
- Routing rules can adjust automatically as a client's behavior changes
Choosing your model
There is no universally 'correct' answer. A pure A-book is lower risk and regulator-friendly but demands scale. A pure B-book is higher margin but higher risk and invites conflict-of-interest scrutiny. A well-managed hybrid captures the best of both, but it requires solid risk-management tooling and a clear, data-driven routing policy.
Run the model that fits your desk
Your risk model is too important to default into by accident. Whichever you choose, you need a back office that gives you real-time visibility into exposure. Compare what fits your scale on our pricing page, or talk to our team about risk tooling.