📖 Financial Lexicon Term
What is B-Book?
An execution model where the broker takes the opposite side of a client's trade. If the client wins, the broker loses money. If the client loses, the broker profits.
Detailed Explanation
B-Booking (also known as Market Making) keeps risk in-house. Statistically, most retail traders lose money. By internalizing trades instead of hedging them externally, the broker keeps the client's losses as profit. This model can create a conflict of interest, but it also allows brokers to offer zero-commission accounts and fixed spreads.
💡 Practical Trading Example
A retail trader deposits $1,000 and loses it all on a B-Book broker. The broker keeps the $1,000 as pure revenue.