What is “C-Book” Execution?
You might be familiar with forex brokers that use A-Book or B-Book models. But sometimes, you’ll hear the term “C-Book” being thrown around.
So what is it?
Well, despite sounding like a totally new method, C-Book isn’t really a separate execution model. It’s more of a fancy marketing term used by some brokers and CFD providers to describe different risk management strategies — basically creative tweaks of A-Book or B-Book models.
In our view, C-Book is more buzzword than breakthrough.
And while it might be sold as a smarter way to manage risk, the real goal behind C-Book strategies is often to boost broker profits. Some of these methods are considered controversial, and whether they’re ethical or not is up to you to decide.
Let’s break down three common C-Book strategies:
1. Partial Hedging
This is the most common C-Book approach.
Instead of fully hedging a customer’s position (A-Book), the broker only hedges part of the risk and leaves the rest unhedged (similar to B-Book). This gives the broker a chance to make money if the price moves in its favor.
Think of it like this:
It’s part A-Book, part B-Book.
Example:
Elsa opens a long EUR/USD position of 1,000,000 units (10 lots) at 1.2001. A 1-pip move equals $100.
The broker decides to hedge 50% of her position. It buys 500,000 EUR/USD from a liquidity provider (LP) at 1.2000.
Now, EUR/USD rises.
Elsa closes her trade at 1.2101 for a 100-pip gain = $10,000.
Since Elsa made a profit, the broker loses $10,000 — but it hedged half the position.
The hedge trade gained 102 pips on 500,000 units, which is $5,100. That cushions the broker’s loss, bringing the net loss down to $4,900.
Had the broker not hedged at all (full B-Book), it would have lost the full $10,000.
But what if the price dropped?
Let’s say EUR/USD falls and Elsa’s stop-loss is hit at 1.1951, giving her a loss of 50 pips = $5,000.
The broker gains $5,000 on the B-Booked portion. However, its hedge lost 48 pips on 500,000 units = $2,400.
So the broker’s net profit is $2,600, instead of the full $5,000.
Summary:
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Full hedge (100%) = A-Book
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Partial hedge (<100%) = C-Book
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No hedge = B-Book
2. Overhedging
This is when the broker hedges more than the actual size of the customer’s position — for example, 110% instead of 100%.
Think of it as A-Book with extra juice, or “A-Book+”.
Why do this?
If the broker believes a trader is skilled and the trade will likely be profitable, it might try to “ride along” and make even more profit from the same trade.
Example:
Elsa buys 1,000,000 EUR/USD at 1.2001.
The broker hedges 110% of the position by buying 1,100,000 EUR/USD from an LP at 1.2000.
EUR/USD rises.
Elsa gains $10,000, meaning the broker loses $10,000.
But the hedge trade gains even more, thanks to the extra 100,000 units, resulting in a net profit for the broker.
Of course, this only works if Elsa is right.
When overhedging backfires:
If EUR/USD falls and Elsa loses $10,000, the broker gains $10,000 from her loss.
But now, its hedge trade also loses — and because it was larger than the customer’s position, the broker’s net result is a loss.
Summary:
Overhedging can increase profit if the customer wins, but amplify losses if the customer loses.
3. Reverse Hedging
This one’s wild.
Instead of hedging the trade in the opposite direction (like normal), the broker doubles down and takes the same side as the customer — betting that the customer will be wrong.
In other words:
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If the customer goes long, the broker also goes long with an LP.
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It’s like B-Book on steroids: “B-Book+”
Example:
Elsa buys 1,000,000 EUR/USD at 1.2001.
As her counterparty, the broker is now short 1,000,000 EUR/USD.
Instead of hedging by going long (to reduce its exposure), the broker does a “reverse hedge” — and opens another short position of 500,000 units with an LP.
Now the broker is short 1,500,000 units in total!
If EUR/USD falls:
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Elsa loses = Broker gains
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LP position gains = Broker gains again
Double win!
But…
If EUR/USD rises:
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Elsa profits = Broker loses
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LP position loses = Broker loses even more
This strategy amplifies both potential profit and potential loss. If the broker misjudges the trader’s skill, it can get wrecked.
Final Thoughts:
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“C-Book” isn’t a totally new model — it’s just a label for creative variations of existing risk management strategies.
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Brokers may use partial hedging, overhedging, or reverse hedging to try to maximize profits.
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These methods are risky and controversial, and it’s up to you to decide if you think they’re fair.