How Pricing Works in the Forex Market. Let’s look at how pricing works in the forex market. In an exchange-based market, there is a “single market” […]
How Pricing Works on Exchanges. To help you better understand why it’s important to understand the significance of the FX market being an OTC market, let’s […]
Where Does the Forex Broker’s Price Come From? Now let’s take a look at where does the forex broker’s price come from. When trading forex, you […]
Your Broker’s Hedging Policy. What is your broker’s hedging policy? Ask your broker for a written copy of its hedging policy. The hedging policy outlines the […]
Know Your Forex Broker’s Hedging Policy Do you know your forex broker’s hedging policy? For every forex broker, each and every trade entered into by its customers […]
Reverse Hedge. Another variant of C-Booking is the reverse hedge which is when a customer’s trades are either partially or completely reverse hedged. This practice is […]
Over-hedge. Let’s take a look at what an over-hedge is. C-Booking is not limited to partial hedging. Another variant of C-Booking is when a broker can […]
Partial Hedge. The most common form of “C-Book execution” is the partial hedge of a customer’s order. A broker can hedge market risk in part and not […]
C-Book and How Forex Brokers Manage Their Risk. Now let’s take a look at C-Book and how forex brokers manage their risk using it. Aside from […]
Most Forex Brokers Use a Hybrid Approach. Most forex brokers use a hybrid approach. We don’t see anything wrong with a broker operating both A-Book and […]
Large Forex Brokers. For larger forex brokers, because they have many customers opening trades in both (long and short) directions, they are able to internally offset […]
Customer Profiling in the Hybrid Model. Let’s look at customer profiling in the hybrid model. The forex broker has to decide which customers go to A-book […]
The “Hybrid Model” Used By Forex Brokers. Let’s review the hybrid model used by forex brokers. In the previous lesson, we talked about why forex brokers are […]
What B-Book Brokers Don’t Like. Customers Who Win Consistently B-Book brokers don’t necessarily like customers who win consistently. These customers will grow their account balance over time. […]
What B-Book Brokers Like. A large number of similarly sized customers. B-Book brokers prefer to have a lot of similarly sized customers who trade as frequently as […]
How B-Book Brokers Make Money. You buy from the broker and sell to the broker. If you make money, the broker loses money, and vice versa. […]
Why Do Forex Brokers B-Book? Let’s take a look at why do forex brokers B-Book? And let’s start with the question, what is a B-Book broker? […]
Managing Residual Risk. Let’s look at managing residual risk from a forex broker’s perspective. They can manage it in two ways: The broker can transfer this […]
Internalization. Let’s continue our discussion of internalization. For example, the broker can see in its book that it has a total of 10 million units of long GBP/USD […]
Internalization. Let’s examine internalization, which is how forex brokers aggregate orders and hedge residual risk. How Forex Brokers Aggregate Orders and Hedge Residual Risk. With A-Book […]
Riskless Principal. When a trade is executed via STP, this type of transaction is known as a “riskless principal” or “matched principal” transaction. What is a […]