Broker Terms

A-book execution routes client orders to external liquidity providers, so the broker acts as an agent and earns commission instead of profiting from client losses.

B-book execution keeps orders inside the broker, meaning the broker becomes the counterparty and profits when clients lose.

A demo account simulates real market pricing with virtual funds, allowing traders to practice without risking capital.

An ECN (Electronic Communication Network) broker connects traders directly to liquidity providers (banks, institutions) without a dealing desk. ECN brokers offer direct market access, variable spreads, and don't trade against clients, making them transparent but often charging commissions.

ECN/STP brokers route orders directly to liquidity providers, earning commissions instead of trading against clients.

An intermediary connects traders with liquidity, credit, or infrastructure—such as prime brokers, introducing brokers, or payment providers.

An introducing broker refers clients to a brokerage in exchange for compensation while the broker handles execution, custody, and compliance.

A liquidity provider streams continuous bid and ask prices into a broker's platform, aggregating order flow so traders can execute with tight spreads and deep depth.

A Market Maker (or Dealing Desk broker) creates the market for their clients by taking the opposite side of trades. They offer fixed spreads, no commission, and instant execution, but may have conflicts of interest since client losses can be their profits.

A market maker dealing desk broker internalizes client flow, quoting prices from its own book instead of routing orders straight to the interbank market.

Prime brokerage services provide institutional traders with aggregated liquidity, financing, and clearing so they can access interbank markets efficiently.

Regulation covers the laws and oversight governing brokers and banks, including capital standards, client fund protections, and disclosure requirements.

A retail trader is an individual who trades financial markets for their own personal account, not on behalf of an institution. Retail traders access forex through brokers and typically trade smaller positions compared to institutional traders, facing different challenges and costs.

A segregated account keeps client funds separate from broker operational capital, helping protect deposits if the broker faces insolvency.

The spread is the difference between the buy price (ask) and sell price (bid) of a currency pair. It represents the broker's commission and is your immediate cost when opening a trade. Major pairs like EUR/USD typically have 0.5-2 pip spreads.

An STP (Straight-Through Processing) broker routes client orders directly to liquidity providers, reducing dealing-desk conflicts and offering aggregated pricing.

A sub-account is an additional account under a main profile used to separate strategies, currencies, or risk exposures without opening new paperwork.

A two-way price is the simultaneous bid and ask quote streamed by liquidity providers, revealing the spread a trader must cross to transact and signaling underlying market liquidity conditions.

A white label broker uses another firm’s infrastructure and liquidity while operating under its own brand to acquire and service clients.