Key terminology, explained.

Key terminology for forex brokers, prop firms, and fintech professionals.

A/B Book

A risk management model used by brokers. In the A-book model, client orders are passed directly to liquidity providers (STP). In the B-book model, the broker acts as the counterparty to client trades. Most brokers use a hybrid approach, routing trades based on client profiling and risk exposure.

Bridge

Software that connects a trading platform (like MT4/MT5) to external liquidity providers. It handles order routing, price aggregation, and execution. Bridges are critical for brokers who want to offer STP/ECN execution.

Dealing Desk

The department within a brokerage that manages order execution, liquidity, and risk. Dealing desk operators monitor client flow, manage A/B book allocation, and handle market-making activities.

Expert Advisor (EA)

An automated trading program designed for the MetaTrader platform. EAs can execute trades, manage positions, and implement complex strategies without manual intervention. Brokers may develop custom EAs as plugins or tools for clients.

FIX Protocol

Financial Information eXchange — a standardized electronic communications protocol for real-time exchange of securities transaction information. Used by institutional traders and brokers for direct market access (DMA) execution.

Liquidity Aggregator

A system that consolidates price feeds and order execution from multiple liquidity providers into a single pool. This gives brokers access to deeper liquidity, tighter spreads, and more competitive pricing for their clients.

Low-Latency Hosting (LD4/NY4)

Co-location of trading servers in major financial data centers (Equinix LD4 in London, NY4 in New York) to minimize network latency. Essential for brokers offering fast execution and for proximity to major liquidity providers.

MAM/PAMM

Multi-Account Manager / Percentage Allocation Management Module — systems that allow a fund manager or signal provider to manage multiple client accounts from a single master account, with proportional trade allocation.

Payment Service Provider (PSP)

A company that provides payment processing services for deposits and withdrawals. For brokers, a reliable PSP handles multiple currencies, reduces fraud, and ensures fast settlement times.

Prop Firm (Proprietary Trading Firm)

A company that provides traders with funded accounts after they pass an evaluation or challenge. The firm risks its own capital, and traders share profits. Prop firms require specialized technology for challenge management, risk monitoring, and payout automation.

STP (Straight-Through Processing)

An execution model where client orders are passed directly to the liquidity provider without broker intervention. STP brokers earn revenue from spread markups or commissions rather than from client losses.

White Label

A licensing arrangement where a broker uses a fully branded version of a trading platform (like MT4/MT5 or cTrader) provided by a technology partner. This allows the broker to operate under their own brand without building a platform from scratch.