How Do A-Book Brokers Make Money?
You might have noticed in the previous examples that A-Book brokers don’t make money from price movements because they transfer the market risk to another party. The examples focused on explaining how risk is offloaded, but now let's explore how A-Book brokers actually earn revenue.
Unlike B-Book brokers, A-Book brokers don’t profit when their customers lose. But they’re still businesses and need to make money. Understanding their revenue sources helps you see their incentives—and whether those incentives align with yours.
How Revenue Is Generated by A-Book Brokers
When you place a trade, an A-Book broker:
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Sells the asset to you—either at the same price it gets from its liquidity provider (LP) plus a commission, or
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Buys the asset from the LP for its own account to hedge the risk.
Since the broker isn’t exposed to market risk, it makes money mainly in two ways:
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Commission fees
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Spread markup
Commission
In some cases, the broker charges a commission based on the size of your trade. This might be:
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A fixed fee per million dollars traded
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A fee per standard lot
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A percentage of your trading volume
For example, a broker might charge $60 per $1 million traded or $6 per standard lot. Some brokers offer discounts for higher volumes—for instance, trading over $100 million monthly could reduce your fee to $40 per $1 million.
Spread Markup
Another way brokers earn is by marking up the spread—the difference between the buy and sell prices.
The broker buys from liquidity providers at “wholesale” prices but sells to you at “retail” prices with a small markup, similar to how grocery stores buy wholesale and sell retail.
This markup is the broker’s profit for providing you with access to trade currencies.
Example: Spread Markup on EUR/USD
Imagine the broker adds a 1 pip markup on EUR/USD:
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The broker buys from the LP at 1.2000 but sells to you at 1.2001.
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When you close the trade, the broker also ensures it earns on the exit price.
If EUR/USD rises and you profit 98 pips, the broker’s hedge with the LP loses 100 pips, so the broker’s net profit is 2 pips (from the markup).
If EUR/USD falls and you lose 302 pips, the broker gains 302 pips from your loss, but then loses 300 pips on its hedge, again netting 2 pips profit.
Key Takeaway:
Because the broker hedges its risk, it doesn’t lose money whether you win or lose—it earns from the markup or commission instead.
The Tradeoff for Brokers
Hedging means the broker avoids market risk, but also misses out on potential gains if prices move in its favor. The broker’s income comes solely from commissions and spread markups.
This model removes conflicts of interest since brokers earn the same regardless of your trade outcome.
How Much Can an A-Book Broker Make?
Here’s a simplified look:
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Raw institutional spread on EUR/USD: ~0.1 pip
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Platform fees: ~0.2 pip
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Broker markup: ~1 pip
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Total retail spread: ~1.3 pips
For each standard lot (100,000 units), this translates to about $13, with the broker’s markup earning around $10 per lot.
Mini lots (10,000 units) generate about $1, and micro lots (1,000 units) about 10 cents.
Revenue Depends on Volume
Because earnings per trade are small, brokers need many customers trading frequently and in large sizes to make significant profits.
For example, with 1,000 customers each trading 10 mini lots per month, the broker could make around $10,000 monthly or $120,000 yearly.
Summary
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A-Book brokers rely on commissions and spread markups to earn money.
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They hedge customer trades to avoid market risk.
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Their profits don’t depend on whether customers win or lose, aligning their interests more closely with traders.
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However, this model requires high volume and active traders to be profitable and presents its own challenges.