Broker practice of hedging a client's trade in the external market, so the broker earns spread or commission and carries no directional risk.
When an order is A-booked, the broker immediately takes an offsetting position with a liquidity-provider. Whatever the client makes, the broker makes back on the hedge, minus or plus the small edge it built into the price.
A-booking is capital-light and predictable, but it earns less per trade than internalising. Brokers typically A-book clients whose flow is consistently profitable or large. See b-book.
Example: a client buys 10 lots of GBP/USD. The broker buys 10 lots from an LP at 0.3 pips better. The client makes $4,000; the broker collects $4,000 on its hedge plus roughly $30 of markup, net exposure zero.
Original diagrams for the ideas on this page. Illustrative, not real market data.
The bid-ask spread. Buy orders sit below, sell orders above, and the gap between the best bid (50.01) and best ask (50.04) is the spread you pay to cross. Bar length shows the size resting at each price.
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