Why B-Book Forex Broker?
When you open a trade with the B-Book forex broker, that broker executes the other side of your trade and does not hedge. The broker keeps the trade "in-house".
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Internalization: How Forex Brokers Aggregate Hedging Redundancy Orders and Risks
With A-Book (or STP) execution, the broker manages the risk of each individual trade. But what if one trader opens a long position in GBP/USD and another trader opens a short position in GBP/USD at or at the same time?
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Performing STP: How Forex Brokers Manage Their Risk
A-Book brokers are also sometimes marketed as “STP brokers”. While both are similar in that they transfer market risk, they are actually two different ways of executing an order.
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Challenges of A-Book Execution
The A-Book implementation model comes with its own unique challenges. An A-Book forex broker can only earn profits from markups IF the rates at which it trades with the LP are better than the prices at which the broker trades with its customers.
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How A-Book Brokers Make Money
Unlike a B-Book broker, an A-Book broker does NOT make money when its customers’ trades lose. But an A-Book broker is not a charity. It’s a business and needs to generate revenue
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A-Book: How Do Forex Brokers Handle Risk?
While your forex broker will always be your counterparty and take the other side of your trade, it does not imply it has to bear the risk of being on the losing end of the trade and losing money. If the broker does not want to "B-Book" or bear the market risk, a third party can be found and the risk can be transferred to them.
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B-Book: How Do Forex Brokers Handle Risk?
When a retail forex broker takes the opposite of a customer's deal it has the option of either ACCEPTING or TRANSFERRING the market risk to another market participant. When a broker agrees to accept market risk when a trade is been carried out is referred to as “B-Book execution”. The act of taking the opposite of your transaction is called B-Booked execution. Your line of work is often known as "B-Booked."
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How Forex Brokers Manage Their Risk and Make Money
A lot of retail traders have no idea of how an order is processed or how forex brokers or CFD providers really operate. It is aimed at forex traders wishing to gain a practical understanding of how forex brokers manage their risk and make money.
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Where Are Retail Forex Traders Actually Trading?
If that’s the case, then WHERE are you actually trading? When you click “Buy” or “Sell” on your forex broker’s trading platform, where do your orders go?
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Trading Forex with CFDs
CFD stands for “Contract for Difference”. A CFD is a tradable financial tool that reflects movements of the asset underlying it.
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What Are You Actually Trading In Forex?
New forex traders might be puzzled how it’s possible to trade currencies they don’t physically own. They’re also often confused about how it’s possible to sell something before buying it.
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Is the Forex Broker Licensed and Regulated?
Is the forex broker licensed and regulated? Is the company licensed, regulated, and authorized to operate as a forex broker where you live?
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Is the Forex Broker an legitimate Organization?
With whom are you trading? Is the forex broker a reputable business? Can you put your faith in it?
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What Are the Functions of Forex Brokers?
What is the order execution quality of your FX broker?
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What to Look for When Choosing a Forex Broker
As a beginner trader, the first and most important decision you'll make is which forex broker to use. This is why you should always do your due diligence ("do yo DD") and DYOR (do your own research).
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How to Avoid a Margin Call
If you fail to understand the concept of margin or not knowing what to do when faced with a margin call from your broker, you will definitely experience the shock of your trading account blow up.
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Margin Jargon Cheat Sheet
As you move into the world of margin trading, it may sounds like you have to learn an entirely new language to truly identify what’s goin any peculiarities, also margin trading comes with its own nomenclature and jargon. In this lesson we will discuss some handy cheat sheet you may come along in any trading platform.
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The Relationship Between Margin and Leverage
You use margin offered by your broker to create leverage. Therefore Leverage is the increased “trading power” that is available when using a margin account.
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Caution: Different brokers in Forex tender different Margin Call and Stop Out Levels
As margin and Stop Out Levels are key to consider always while opening trade, Out of the thousands of Broker around the world, Each retail forex broker or CFD provider sets their own Margin Call Level and Stop Out Level.
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Trading Scenario: What Happens If You Trade With Just $100?
Can you imagine What happens if you have account and wants to set trade with just $100?
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