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Straight Through Processing STP , also known as the A-Book Forex brokerage model, is the simpler method of the two options. With STP, clients place trades through your Forex platform, and these positions are sent directly to the liquidity providers with whom you have a relationship. In return for providing the trader with access to the liquidity provider, the broker charges the trader a small portion of the spread, a per transaction commission fee, or a mixture of the two.
Dealing desk, or B-book, brokers take a more active role in the market, by taking the opposite position of their traders. However, you run the risk of losing money by being caught on the wrong side of a trade. While a B-Book Forex brokerage requires more technical knowledge, as you have to watch out for high-volume traders and scalpers, you are able to attract more traders by offering very low spreads, since your primary source of profit is countertrading.
Many successful brokers capitalize on the advantages inherent in both A-Book and B-Book trading, run their brokerage as a mix between the two.
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Some traders are wary of working with Dealing Desk brokers, because they are aware of the conflict of interest present if your brokerage only makes a profit when the trader has a losing position. For traders such as these, you can offer STP trading, while traders who are only looking for the lowest possible spreads can be serviced on the B-Book model.
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