Your broker is your doorway to the market. It shows you prices, executes your orders and holds your funds.
1Youclick buy
2Brokerprices & executes
3Liquidity providersbanks & non-banks
4Interbank marketwhere the big flow meets
Three ways brokers handle your trade
B-bookMarket makerTakes the other side of your trade. Fixed or wider spreads, no commission.
A-bookSTPPasses your order straight through to liquidity providers.
RawECNMatches orders in a network. Raw spreads plus commission.
- Market maker (dealing desk): the broker takes the other side of your trade. Often simple pricing, no commission.
- STP: your order is passed through to liquidity providers.
- ECN: orders meet in a network of liquidity; you pay raw spreads plus commission.
Most retail brokers today are hybrids: some flow goes to the market, some is kept in-house.
How brokers make money
Spreads, commissions, swaps and sometimes fees for deposits, withdrawals or inactivity.
Wick says
"If the broker takes the other side, do they want me to lose?" A well-run broker manages risk across thousands of clients and earns from spreads either way. A shady one manipulates prices. That's why regulation matters (next lesson).
Key takeaways
- Brokers execute, quote prices and hold your money.
- Market makers, STP and ECN differ in how orders are filled.
- Know how your broker earns: spreads, commission, swap, fees.