Click "buy" in your platform and the order leaves your screen — but where does it actually go? For retail forex there are two fundamentally different answers, and everything about your relationship with a broker follows from which one applies to your account. Brokers rarely volunteer this information on the front page, which is exactly why it belongs in a free curriculum.
The two models
An A-book broker passes your order through to external liquidity providers — banks and other institutions — and earns the spread or a commission for the service. Your win or loss lands on someone else's book. The broker's incentive is simple: they want you to trade often and to stay solvent, because a busy, surviving client is a stream of commissions.
A B-book broker takes the other side of your trade itself. Your loss is, mechanically, their gain — and your win is their loss. This is not automatically sinister: warehousing small retail flow is often cheaper than hedging it, most retail traders lose on their own without any help, and a regulated B-book broker still owes you correct execution. But the incentive structure deserves clear eyes: the house is now playing against you, however politely.
Most large brokers run both books at once, routing profitable or large traders to the A-book and warehousing the rest. Where you sit on that spectrum can change as your trading does.
The spread is their cut
Whichever book holds your order, the spread — the gap between the buy and sell price — is the broker's most reliable income. It is charged on entry, invisible on the P&L as a fee, and it scales with every trade you take. Commission accounts make the cost explicit instead, which is usually the more honest arrangement for anyone trading seriously. When comparing brokers, compare the all-in cost per round trip on the pairs you actually trade, measured during the sessions you actually trade them — advertised minimum spreads are marketing, not data.
Regulation is your backstop
The single strongest filter for choosing a broker is not spreads, platforms, or bonuses — it is the regulator. A broker answering to a serious authority operates under rules about segregating client funds, handling complaints, and reporting conduct, with a compensation scheme behind some of them. A broker regulated somewhere exotic operates under whatever rules it finds convenient. Verify the licence number directly on the regulator's own register, not on the broker's website, before a single dollar moves.