Ecosystem · Interactive process map
The path of an order
From the click in the MetaTrader frontend to the customer execution – and to the separate risk hedge of the broker. A-Book, B-Book and Hybrid in comparison.
On this page
Scope of applicationInteractive process cardTwo process pathsA-Book / B-Book / HybridNet exposureDeviationsEcosystem and BoundariesSourcesFollow the order. Understand the risk.
The simulator looks at an OTC CFD broker that is itself the client’s counterparty. A client order and the broker’s hedging transaction are two separate transactions. A-Book and B-Book refer here to the risk treatment, not the execution type of the platform.
Interactive order and risk path
What happens after the click?
Select the model, change the volume and click on the stations. “Continue” leads step by step through the explanation. The result values always show the entire selected example sequence.
CUSTOMER BUSINESS
BROKER SEPARATE RISK EXPOSURE
User → trading interface
The user creates an order. An order is initially an instruction, not yet an executed trade.
The exemplary values presuppose a completely suitable protection.
Positive values mean long, negative short exposure. The direction refers to price movements of the instrument. No money risk, margin or profit is calculated.
Two paths, two contractual relationships.
The customer path
Frontend → Broker Servers → Execution or Rejection → Status. An order is the order; a deal is the executed trade. A position describes the resulting or modified trading obligation.
The Broker Path
Customer book → Net exposure → Risk rule → External hedge if applicable. A positive external hedge compensates for a negative broker exposure here. The broker’s partner does not automatically become the customer’s contractual partner.
The diagram shows the hedge after the customer execution. Actual systems can hedge before, in a timely manner or aggregated. The feedback to the customer does not have to wait for the hedge. The sequence of steps is a didactic outline, not a statement about universal server times.
Price feeds, bridges, gateways and aggregators can support the process; their specific arrangement depends on the installation. A price supplier does not also have to be a hedging partner. MetaQuotes provides platform technology; the broker operates or is responsible for the trading service under consideration here.
A-book, B-book and the mix.
| Selection | Modeled here | What the customer cannot derive from it |
|---|---|---|
| A-Book | 100 % of the remaining net market exposure shall be externally hedged. Contradictory customer positions are considered first. | That his individual order has been forwarded one-to-one or his contract exists directly with the external partner. |
| B-Book | No new external hedge of the portfolio under consideration. The net risk remains with the broker. | That each customer position in isolation creates an equal risk or abuse takes place. |
| Hybrid hybrid | The selected proportion of the net risk shall be hedged. The remaining exposure remains internal. | That the real quote is permanently fixed or is the same for all instruments. |
The labels are simplistic industry terms. An A-book can also hedge one-to-one instead of on a net basis. Our selection explicitly uses the net approach. “STP” does not automatically describe an agent role; definition and concrete contract structure must be checked separately.
Why 100 units is not always 100 units of risk.
Customer net exposure: +100 − 40 = +60.
Broker counterpart: −60.
External hedge at 100%: +60.
Remaining broker exposure: −60 + 60 = 0.
With a hybrid share of 50%, the hedge is +30; the broker remains −30. Stay in the B-book -60. If the counter positions are larger than the new order, the direction of the required hedge can reverse.
This compensation requires comparable instruments and risk characteristics. Correlation between different products is not an exact neutralization. Even with zero remaining linear market risk, there are potential base, funding, counterparty and operational risks.
The MT5 hedging account model allows multiple positions in a customer account. The external risk hedge of a broker is a separate business. Similarly, aggregating our customer book is not the netting booking rule of a single MT5 account.
What becomes visible in the case of deviations.
Rejection: The new order will not be executed. Existing other customer positions do not disappear as a result. Your risk remains included in the portfolio calculation.
Partial filling: Our example runs half and cancels the rest. In fact, the permissible filling rule together with the execution mode determines how to deal with unexecuted volume. The model does not stand for every MT5 order.
Hedge fails: In the hedge expressly downstream here, the customer business has already come about. The broker remains unsecured. Systems with upstream protection can have other consequences.
Even a successful hedge does not guarantee an identical price. Between customer price and external execution price there may be spread, mark-ups, slippage and time deviations. These price components are not calculated in the unit simulation.
The place of the other ecosystem actors.
| Actor/Service | Relation to order expiration |
|---|---|
| Expert Advisor / Signals | Can trigger trade requests; they do not replace server verification or execution. |
| VPS / Hosting | Can support the accessibility of automated processes; no trade counterparty. |
| MetaQuotes / Platform Technology | Frontend and server technology; the specific broker roles must be checked separately. |
| Bridge / Gateway / Aggregator | Possible connection to external systems; not a mandatory part of every installation. |
| Price supplier / hedging partner | Reference prices, or Counterpositions; these roles do not have to coincide. |
| Payment service / Bank | Money transfer and custody are different processes than executing an order. |
A wallet address, deposit or displayed balance is therefore not proof of an externally executed business. Likewise, a known application alone proves neither a broker permission nor the existence of a hedge.
The chart covers OTC CFDs with broker as principal. Exchange execution, real agent models, pending orders, pricing and clearing require other or additional paths.
The economic incentives behind the process · Automation and services at a glance · Contractual Roles and Market Anatomy
Sources & scope
Check the evidence.
- MetaTrader 5 · Basic Principles
Manufacturer documentation: order, deal, position, server verification and account models. No evidence for the risk model of a specific broker.
Open the source ↗ - MetaTrader 5 · Executing Trades
Manufacturer documentation: execution modes and filling rules. Simulator is its own simplified representation.
Open the source ↗ - ESMA · Q&A on CFDs, 2016 · SECTION 5, pp. 18–20
Historical MiFID classification; no blanket current legal assessment.
Open the source ↗