What Is an A-Book Prop Firm?
An A-Book prop firm passes your trades directly to the real market. This means when you open a position, it’s executed through external liquidity providers or institutional brokers, not simulated inside a prop firm’s own system. In other words, your orders go live, reaching genuine market participants. This setup is often called STP (Straight Through Processing) or DMA (Direct Market Access). It’s how banks, hedge funds, and serious professional traders execute their trades. The key benefit is alignment. The firm doesn’t earn money when you lose. Instead, it makes money through small commissions or by sharing a part of your profits. That’s a clean, conflict-free model where both sides want you to win. A-Book firms also tend to have:- Real market spreads and pricing instead of artificial quotes.
- No dealing desk, meaning no manipulation of prices or stop-loss levels.
- Lower latency and more accurate fills during volatile moments.
What Is a B-Book Prop Firm?
A B-Book prop firm works very differently from the A-Book model. Instead of sending trades to external liquidity providers, these firms keep trades inside their own internal system. This means your trades are simulated within the firm’s platform, not executed in the real market. In this setup, the firm often acts as the counterparty to your trades. When a trader wins, the firm pays out from its own funds. When a trader loses, the firm keeps the losses. Because of this, the firm’s profits can be tied to trader losses, which creates a possible conflict of interest. Many modern B-Book firms still offer good trading conditions and fair payout structures, but the execution quality and transparency can vary. Some simulate live spreads and liquidity accurately, while others control the pricing completely, making it harder to verify execution quality. While B-Book firms are common in the industry because they are easier to manage and scale, they don’t provide the same level of real-market exposure as A-Book prop firms. Traders using these firms should understand that their performance might not always reflect true market conditions.Key Differences Between A-Book and B-Book Prop Firms
| Feature | A-Book Prop Firm | B-Book Prop Firm |
| Trade Execution | Sent to real liquidity providers (STP/DMA) | Kept internal with simulated fills |
| Profit Source | Commissions and trader success | Trader losses and internal spreads |
| Transparency | High, with real market data and verified execution | Limited, depends on firm honesty |
| Trader Alignment | Firm profits when trader wins | Firm profits when trader loses |
| Example | Lux Trading Firm | Various simulated prop firms |
