A-book vs B-book: how prop firms handle your trades
Prop firm accounts may be simulated, and fees may not be refundable; check each firm's terms. Nothing here is financial advice. Risk disclaimer
"A-book" and "B-book" are brokerage terms for what happens to a client's order: is it passed to the market, or does the broker take the other side? The terms come up often in discussions about prop firms. This article explains what they mean, why they apply differently to prop firm accounts, and what a firm's terms can and cannot tell you.
The brokerage terms
- A-book
- The broker passes your order on to the market or to a liquidity provider, such as a bank or larger dealer, and earns from spreads, commissions or a markup. Your profit or loss is matched by someone else in the market, not by the broker.
- B-book
- The broker keeps your order on its own books and becomes the other side of your trade. When you lose, the broker gains, and when you win, the broker pays. Brokers that do this manage the combined risk of all their clients' positions.
- Hybrid
- The broker sends some orders to the market and keeps others, often deciding by account, trade size or how a client has performed over time.
None of these is unusual in retail forex and CFD brokerage. They matter because they decide whose money is on the other side of your trade and whether the party executing your orders profits when you lose.
Why prop firm accounts are different
In a prop firm program, you are usually not a broker's client. You trade an account the firm provides, under the firm's rules, and you are paid under the firm's payout terms. Two cases need to be kept apart:
- Simulated accounts. Trades are recorded at market prices but are not placed in the market. Strictly, nothing is A-booked or B-booked: there is no counterparty to your trade. Any payout comes from the firm's own funds, under its terms. Many firms run both the evaluation and the funded stage on simulated accounts.
- Live accounts. Some firms move selected traders to an account that trades real capital, typically in an account at a broker held by the firm. From that point your orders reach the market through that broker, and the broker's own execution model applies.
For example, FTMO's FAQ states that all trading is processed on simulated accounts and that clients do not trade with real capital, as recorded in our FTMO review. TradeDay's help center describes simulated funded accounts with a possible later move to a live account at a broker, as recorded in our TradeDay review.
What a firm may do with your trades
Even when your account is simulated, a firm can decide to place its own trades in the market that follow, reverse or ignore what its traders do. That is a decision about the firm's own money, and firms are not always required to say how they make it. What a firm's public documentation usually tells you is:
- whether your account is simulated or live, at each stage;
- who pays your reward or payout, and from what;
- which trading practices are forbidden, often described as practices that would not be possible in a real market;
- whether the firm may change execution conditions such as spreads, commissions or slippage on your account.
What it usually does not tell you is whether, or how, the firm hedges its exposure to your results. We record what a firm publishes and do not guess at the rest.
Why it matters to you
- Payouts. On a simulated account, a payout is the firm paying you from its own funds under its terms. The firm's ability and willingness to keep paying depend on its finances and its terms, not on a market counterparty.
- Rules and execution. Forbidden-practice lists, news restrictions and rules about "unrealistic" fills exist partly because simulated results may not be reproducible in a real market. Read them before you trade.
- Conflicts of interest. As with a B-book broker, a firm whose income depends on fees from traders who fail has incentives worth keeping in mind. Clear, monitorable rules and published payout terms reduce the room for disputes.
Questions to check in a firm's terms
- Is the account simulated or live in the evaluation, and in the funded stage?
- If a move to a live account is possible, who decides, on what conditions, and at which broker?
- Who pays the payout, and are there caps, minimums or discretionary reviews?
- Which trading practices are forbidden, and how does the firm say it detects them?
- Can the firm change spreads, commissions or execution on your account, and does it say when?
Our reviews answer the first and third questions for each firm from its official pages, with a source for every value. See all reviews, or read what a prop firm is and how funded trader programs work.
Frequently asked questions
Are prop firm trades A-booked or B-booked?
On a simulated account, your trades are not placed in the market at all, so neither term strictly applies. A firm may still choose to place its own trades based on yours, which it may or may not disclose.
Is B-booking a scam?
No. It is a common way for brokers to manage client orders, but it means the other party profits when the client loses, so disclosure and fair execution matter.
How do I know whether my funded account is simulated or live?
Read the firm's terms and FAQ for the account type you are buying. If they do not say clearly, ask the firm in writing before you pay.
Why do prop firms ban some trading strategies?
Firms usually say the bans protect against results that could not be reproduced in a real market, such as exploiting price feed delays. Each firm's list of forbidden practices is set out in its own terms.