A-Book vs B-Book: What Every Retail Trader Needs to Know

[cryptoenthusiast]

█ A-Book vs B-Book: What Every Retail Trader Needs to Know
Most retail CFD traders have never even heard the terms “A-Book” and “B-Book,” yet almost all of them are directly affected by how these models work. Your broker’s choice between the two can change the prices you see, how your orders are filled, and even whether your stop loss gets hit. Let’s break it down so you know exactly what’s going on behind the scenes.

█ What is A-Book?
An A-Book broker routes your orders straight to external liquidity providers, such as banks, market makers, or directly to an exchange in the case of futures or spot markets. Your broker is essentially the middleman, passing your trade along and matching it with a real counterparty.

How they make money:

Spreads (the difference between the bid and ask prices).
Commissions on each trade.
Occasionally a small markup on the feed.

Because they don’t profit when you lose, an A-Book broker’s ideal client is a trader who trades frequently and consistently, your activity is their revenue stream.

█ What is B-Book?
A B-Book broker keeps your trades “in-house,” meaning they take the other side of your position. If you buy, they sell; if you sell, they buy, but all within their own system. Your trades don’t reach the real market at all.

How they make money:

Your losses are their profits.
They may still earn on spreads and commissions, but the main income is the net loss of their client base.

Because the broker profits from losing clients, there’s an inherent conflict of interest. It’s not that every B-Book broker is out to get you, but the incentive structure is very different from A-Book.

█ Hybrid Models – The Modern Reality
Today, many CFD brokers use a hybrid model. This means small accounts or “unprofitable” clients might be B-Booked, while larger or riskier trades are hedged via A-Book routing. This approach balances their risk and maximizes profits.

█ The Stop Loss Mystery – Why It Sometimes Gets Hit When It “Shouldn’t”
A common complaint among retail traders is this:

“My stop loss was triggered on my CFD broker’s chart, but the real market price never touched it.”

Here’s why this happens:

B-Book influence: If your trade is kept in-house, the price you see is the broker’s internal feed, not the pure exchange price. Minor spikes or wicks can appear that don’t exist on the actual CME or underlying market.
Different price feeds: Even A-Book brokers often aggregate liquidity from multiple sources, leading to small discrepancies from the official exchange price.
Overnight sessions: Many CFD brokers price products nearly 24 hours a day, even when the underlying market is closed. This “synthetic” pricing can produce moves that never happened in the actual market.

The result? You might see your stop hit during quiet, low-volume hours when the real market was nowhere near that level.

Side-by-side comparison showing a large wick on a CFD gold chart (left) that never occurred on the actual CME gold futures market (right). This kind of discrepancy can trigger stop losses on CFD platforms, even though the real market price never reached that level — a classic example of the Stop Loss Mystery.

█ Stop Hunting – When the Market Seems Out to Get You
Closely related to the stop-loss mystery is stop hunting, when price spikes just far enough to trigger a cluster of stops before reversing sharply.

In a pure B-Book setup, your broker isn’t just your counterparty, they can also see exactly where all their clients’ stops are placed. If they control the price feed, even the smallest manufactured move in their internal system can sweep through those levels. This can happen intentionally to lock in profits from client losses, or simply as a by-product of how their system reacts during thin liquidity.

From your perspective, it feels like the market was “out to get you,” touching your stop and then running in your direction. But often, that move never existed in the real underlying market at all, it was born inside the broker’s own pricing environment. And while low-volume hours are prime time for this, it can still happen in the middle of the busiest trading sessions.

Comparison of gold CFD pricing (left) and CME gold futures (right). The CFD chart shows a wick that sweeps above previous highs, potentially triggering stop losses, while the real futures market shows no such move, a classic example of suspected stop hunting on CFD feeds.

█ Why This Matters for Retail Traders
Understanding whether your broker uses A-Book, B-Book, or hybrid execution changes how you view price discrepancies, stop-loss triggers, and even your broker’s incentives.

A-Book: Broker earns from your trading volume, not your losses.
B-Book: Broker earns directly from your losses.
Hybrid: They can switch between models depending on the trade and client profile.

Knowing this doesn’t just help you choose a broker, it helps you understand the “market” you’re actually trading in.