Most discount prop firms use B-Book execution where they take the opposite side of your trades. When you lose money, the firm makes money. When you win, the firm loses.
The statistics: 80-95% of retail traders lose money in the first 6 months, making B-Book execution extremely profitable for firms at the expense of traders.
This investigation exposes how execution models create conflicts of interest, which firms use B-Book, and how to identify transparent alternatives.
Investigation reveals the execution model that determines if you actually get paid. How B-Book dealing desks create conflicts of interest and why 80-95% trader loss rates make this model extremely profitable.
Understanding the difference between A-Book and B-Book is critical to knowing if your prop firm has your best interests in mind.
Straight-Through Processing (STP)
Dealing Desk / Market Maker
You place a trade: You buy 1 lot of EUR/USD at 1.1000
Firm takes opposite side: Instead of sending your order to the market, the firm internally sells 1 lot of EUR/USD at 1.1000
Outcome A - You lose: EUR/USD drops to 1.0900. You lose $1,000. The firm gains $1,000.
Outcome B - You win: EUR/USD rises to 1.1100. You gain $1,000. The firm loses $1,000.
As B2Broker and BullRush Academy explain, this creates a zero-sum game between you and your prop firm. One of you wins, one of you loses.
The conflict of interest in B-Book execution isn't subtle - it's fundamental to the business model.
The Core Problem:
When a firm uses B-Book execution, they become your counterparty, not your facilitator. They're not helping you access the market - they ARE the market.
This means every dollar you lose goes directly into their pocket. Every dollar you win comes directly out of their pocket.
B-Book firms benefit when you fail. This creates incentives to:
When you're profitable, B-Book firms have financial motivation to:
According to Amun Consulting, this conflict of interest is why "there is a clear conflict of interest since the broker serves as a counterparty to the transaction rather than just as an intermediary."
Not All B-Book Firms Are Scams
To be clear: B-Book execution isn't illegal, and not all B-Book firms are scams. Many retail brokers use this model transparently. The problem is lack of disclosure and the inherent misalignment of interests between trader and firm.
In contrast, A-Book firms make money through spreads and commissions regardless of whether you win or lose. More trading volume = more revenue. This aligns their interests with yours: they want you to succeed and trade more.
The B-Book business model relies on a simple mathematical reality: most traders lose money.
Scenario: 100 traders buy $200 challenge accounts
Firm Revenue:
Firm Expenses:
Net Profit: $27,500 (77% margin)
This is why B-Book execution is so profitable. Industry data shows the model works because "80–95% of retail traders lose money in the first 6 months."
The Mathematical Reality:
If 90% of traders lose money, a B-Book firm makes profit on 90% of accounts while only paying out to 10%. This creates a business model where trader failure is financially optimal for the firm.
The profitability of B-Book execution depends entirely on one statistic: the vast majority of retail traders lose money.
Multiple sources confirm these statistics. BullRush notes that this high failure rate makes B-Book "highly profitable for firms" while creating significant conflicts of interest.
A-Book execution represents the transparent alternative where firms route your trades to the real market through external liquidity providers.
How A-Book Works:
When you place a trade, the firm immediately sends it to liquidity providers (major banks, institutional traders, hedge funds). Your order gets executed at real market prices. The firm earns through spreads or commissions on the volume, not from your losses.
According to Quadcode, A-Book firms "embrace transparency because their business depends on trust and fair execution."
Most firms don't publicly disclose their execution model, but there are clear patterns.
Important Note:
Many firms use hybrid models - A-Book for profitable traders and B-Book for losing traders. This means they route winners to the market and internalize losers for profit.
B-Book prop firms face a structural risk similar to Ponzi schemes: they need continuous new revenue to cover payouts.
The Dangerous Math:
If a B-Book firm has a month where:
Result: The firm delays payouts, denies withdrawals, or shuts down entirely.
As BullRush warns, "The Ponzi-like risk lies in the fact that B Book firms need continuous revenue from new traders to cover payouts."
Scenario: A B-Book prop firm with 1,000 funded traders
This is why B-Book firms are vulnerable to collapse during trending markets when retail traders collectively profit.
Learn to identify B-Book firms by these warning signs:
No disclosure about execution model, liquidity providers, or how trades are processed. Vague answers when asked about A-Book vs B-Book.
Spreads widen dramatically during news events, platform "crashes" during high volatility, or requotes happen frequently when you're winning.
Your stop losses get hit by 1-2 pips then price reverses in your favor. This indicates the firm may be manipulating prices slightly to trigger stops.
Consistent reports of delayed payouts, arbitrary rule violations on profitable accounts, or sudden account closures without clear explanation.
If challenges are $50-$100, the firm likely isn't making money from fees alone. They need B-Book profits to sustain operations.
Follow these steps to determine if a prop firm uses A-Book or B-Book execution:
Look for statements about "STP execution," "direct market access," or "external liquidity providers." A-Book firms are proud to advertise this. B-Book firms avoid the topic.
Contact support and ask: "Does your firm use A-Book or B-Book execution?" A-Book firms will answer clearly. B-Book firms will be evasive or give vague responses.
During demo trading, place orders during high volatility (NFP, FOMC). Note spread widening, slippage direction, and execution speed. B-Book firms show worse execution when you're likely to profit.
Check forums, Reddit, Trustpilot for execution complaints. Common themes: stop hunting, payout denials, requotes = likely B-Book.
If challenge fees are suspiciously cheap ($50-$100), the firm needs alternative revenue. B-Book profits fill that gap.
Based on transparency, execution quality, and payout history, these firms use A-Book or transparent hybrid models:
Final Recommendation:
Always prioritize transparency over price. A $200 challenge with A-Book execution and fair payouts is infinitely better than a $50 challenge with B-Book execution that denies your winnings.