What is B-Book Execution?

What is B-Book Execution?

B-book execution is a dealing-desk model where the broker internalizes client trades rather than routing them to external liquidity. The broker effectively becomes the counterparty, profiting when traders lose and carrying risk when traders win.

Key Characteristics

• Internal matching: Orders are filled within the broker's book.
• Dealer discretion: Quotes and fills can be adjusted during volatile moments.
• Conflict of interest: Broker revenue is tied to client losses.
• Wider spreads: Markups compensate the broker for holding client exposure.

Trading Considerations

• Strategy fit: High-frequency systems often suffer from requotes or delays.
• Hybrid routing: Many brokers run both A-book and B-book desks depending on client performance.
• Slippage control: Expect larger slippage around news releases.
• Record keeping: Maintain screenshots and logs in case you need to dispute fills.

When It’s Acceptable

Casual or low‑frequency traders may tolerate B‑book models if spreads and execution are transparent and the broker is well regulated. For speed‑sensitive systems, prefer agency routing or ECNs.

Safeguards

Confirm negative balance protection, dispute processes, and segregation of funds. Keep an execution journal to spot patterns and escalate issues with evidence.

Advanced Guidance

Build a repeatable, rules‑based process so decisions are consistent across sessions and instruments. Start from context (higher‑timeframe structure, positioning, macro tone), then define precise triggers and invalidation on execution charts. Track spread and depth so your order type matches conditions. Pre‑compute scenarios (breakout, fakeout, mean‑revert) and map actions for each to reduce hesitation.

Execution Framework

• Plan entries at levels with confluence (structure, momentum, time‑of‑day).
• Place stops beyond the logical invalidation, not arbitrary distances.
• Target at least 2–3R; scale out methodically and trail remainder.
• Avoid thin liquidity windows unless the setup explicitly requires it.
• Record slippage and spreads; poor fills can erase edge.

Review Loop

• Journal setups by session and pair to learn where they excel.
• Tag trades by catalyst (news, trend continuation, range breakout).
• Recalculate expectancy monthly; prune underperforming variants.

Risk Controls

Keep daily loss limits, reduce size after consecutive losses, and pause during regime shifts. Survival enables compounding; treat discipline and execution quality as part of your edge.