The short answer
Retail trading works like a shop. You (the customer) use an app such as MT4 or MT5 to send an order to a broker (the shop). The broker either sells to you from its own shelf, taking the other side of your trade, or orders the goods for you from bigger wholesalers, called liquidity providers. Either way, the price you see, the spread you pay and how fast your order fills all come from the broker.
That one fact explains most of the “broker problems” new traders meet: why the spread jumps on news, why a fill is a little different from the price you clicked, why you sometimes get a requote, and why people worry about stop hunting.
Step 1: the path of one gold order
Here is what happens when you tap Buy 0.10 lot XAUUSD.
| Step | Where | What happens |
|---|---|---|
| 1 | You | You choose the size, the stop-loss and the target, and tap Buy |
| 2 | The app (MT4, MT5 or a web app) | The app is only a window. It sends your order to the broker’s trade server |
| 3 | The broker | The broker checks your margin, then fills the order itself or passes it on |
| 4 | Liquidity | Banks and large trading firms that quote gold prices to many brokers, if the order is passed on |
| 5 | Back to you | The fill price, the open position and your running profit or loss appear in the app |
Two things surprise beginners here. First, the app is not the broker. MetaQuotes makes MT4 and MT5; many different brokers connect their own servers to the same app. That is why the same “XAUUSD” can have a different price, spread and symbol name with different brokers. Our guide to why the gold price differs between brokers and TradingView explains the differences.
Second, most retail XAUUSD trading is a CFD, a contract between you and the broker that pays the difference in price. You never own gold. What is a gold CFD? covers how that contract works.
Step 2: two kinds of shop
The market maker: the shop sells from its own shelf
A market maker (also called a dealing desk) quotes its own buy and sell prices and takes the other side of your trade. When you buy, it sells to you. It usually follows the wider market closely, but the final price comes from the broker.
Think of a phone shop that keeps phones in its own storeroom. It sets the price on the tag and sells to you directly.
ECN and STP: the shop orders from wholesalers
An STP broker (straight-through processing) passes your order on to one or more liquidity providers. An ECN set-up (electronic communication network) shows prices from several providers competing with each other, and usually charges a small commission on top of a smaller spread.
Think of a shop that does not keep stock. When you order, it buys from a wholesaler and adds a delivery fee.
The words “ECN”, “STP” and “raw” on an account page are mostly sales labels. They are not a licence. What decides how your orders are really handled is written in the broker’s order execution policy and conflicts of interest policy. Read those, and check the licence on the regulator’s own register.
Step 3: A-book and B-book, explained like a shop
Inside the broker, each client’s trades go into one of two “books”.
- A-book: the shop passes your order on to a wholesaler. It earns a fee (the spread, a commission or both) on every trade. Your profit or loss does not change its income. It earns whether you win or lose.
- B-book: the shop keeps your order in its own storeroom and takes the other side. If you lose, the shop keeps the money. If you win, the shop pays you from its own pocket.
Many brokers are described as hybrid: they keep the trades of small or usually losing clients in the B-book, and pass on the trades of large or usually winning clients to the A-book, so the risk does not sit with them. Brokers rarely publish exactly how they split clients, so you cannot be sure which book you are in.
Is a B-book wrong? Not by itself. It is a normal, legal model for licensed firms in many countries. But it creates a conflict of interest: the firm earns more when clients lose. The UK regulator, the FCA, has written about a related conflict in trading products: firms can profit when customers are persuaded to trade more often (FCA: contracts for difference). That is why the licence and the regulator matter far more than any promise on a website.
Why this explains spreads, slippage, requotes and “stop hunting”
Spreads
The spread is the gap between the buy price (ask) and the sell price (bid). It is the shop’s built-in price. On gold, the spread is usually small in busy hours and much wider around big news and at the daily rollover, because the prices the broker receives become thin and jumpy. Read why the gold spread widens on news and why it widens at rollover.
What the spread costs (hypothetical numbers). One lot of gold is usually 100 oz, so 0.10 lot is 10 oz. A $0.30 spread on 0.10 lot costs 10 × $0.30 = $3 the moment you open the trade. On an account with a commission of $7 per lot for the round trip, 0.10 lot adds 0.10 × $7 = $0.70.
The full cost picture, including swaps, is in XAUUSD spreads, commissions and swaps, and the bid and ask guide explains why a new trade always starts slightly negative.
Slippage
Slippage is when your order fills at a different price from the one you clicked or set. Gold can move several dollars in a second around US data. By the time your order reaches the broker and is filled, the price may have moved. With passed-on orders, it fills at the next price the market offers; with in-house orders, the broker’s own rules decide. Gold slippage explained shows normal and abnormal cases.
Requotes
A requote is the broker saying “that price is gone, here is a new one”. MetaQuotes’ MT5 help says that in Instant Execution mode, if the broker does not accept the price you asked for, a requote is sent. In Market Execution mode the broker fills at its own price without asking you, which removes requotes but means you accept slippage instead.
Stop hunting
Many traders feel the broker “hunts” their stop. Three honest points:
- A sell trade’s stop-loss is hit when the ask price reaches it, but most charts show only the bid. On a spike, the ask can touch your stop while the bid line never does. See stop hit but price didn’t touch it.
- Stops sit at obvious places (just beyond round numbers and recent highs and lows), and the market itself often sweeps those places.
- Under a B-book a conflict exists, and badly regulated firms can abuse it. So test it with evidence instead of guessing: is my broker stop hunting me? and the execution quality checklist show how.
What a broker earns
| Source | What it is | Who pays |
|---|---|---|
| Spread | The gap between the buy and sell price, sometimes with an extra mark-up | Every trade, win or lose |
| Commission | A fixed charge per lot, common on ECN or raw-spread accounts | Every trade, win or lose |
| Swap | An overnight charge or credit for holding a position past the daily rollover | Trades held overnight |
| Client losses (B-book) | When the broker takes the other side, losing clients’ money is its income | Losing clients |
| Other fees | Some brokers charge for deposits, withdrawals, currency conversion or inactive accounts | Check the fee page |
Notice that the first three are charged whether you win or lose. That is why trading too often is expensive even when your ideas are good.
Problems you will meet later, and where they come from
Once you see the shop model, most broker problems fall into place:
- The price is different from TradingView: each broker has its own feed and spread. Read why.
- The broker changed gold’s margin or leverage: the shop changed its terms. What it means.
- The account went below zero after a crash: negative balance protection.
- The withdrawal is stuck: broker won’t process my withdrawal.
- The order was rejected: MT4 and MT5 error codes.
The next thing to learn is how your account itself counts money: balance, equity, margin, free margin and margin level. Then you are ready for a demo account. The whole path is on Start here: The Gold Trader’s Journey.
Sources
- MetaQuotes, MT5 help: Types of execution (Instant, Request, Market and Exchange Execution; requotes in Instant Execution), checked 5 November 2026
- Financial Conduct Authority: Contracts for difference (conflicts of interest when firms profit from customers trading more often), checked 5 November 2026
- Spread and commission figures in the example are hypothetical and do not describe any firm
Educational content only, not financial advice. We never name or recommend brokers. Trading gold with leverage carries a high risk of loss.
Frequently asked questions
How does retail trading work?
You place an order in a trading app such as MT4 or MT5. The app sends it to your broker’s server. The broker either takes the other side of your trade itself or passes it on to bigger firms, called liquidity providers, that quote prices to many brokers. When you close the trade, your profit or loss is settled in your account.
What is the difference between A-book and B-book?
In the A-book model the broker passes your trade on to a liquidity provider and earns from the spread, a commission or both, so it does not gain when you lose. In the B-book model the broker keeps your trade in-house and takes the other side, so your loss is its gain and your win is its cost. Many brokers are described as mixing the two.
Is a market maker broker a scam?
No. Taking the other side of client trades is a normal, legal business model for licensed firms in many countries. It does create a conflict of interest, which is why the licence, the regulator and the firm’s order execution and conflicts of interest policies matter more than the label on the account.
Is an ECN account better than a standard account?
Not automatically. An account sold as ECN or raw spread usually shows a smaller spread and charges a commission per lot. On gold the total cost can be lower or higher than a standard account, depending on the spread, the commission and how often you trade. Add the two up for your usual lot size before you choose.
How does a broker make money if I win?
From the spread and any commission on every trade, from swap if you hold trades overnight, and sometimes from other fees. If the broker passes your trades on, your wins are paid by the market side, not by the broker. If it keeps them in-house, your wins are its cost, which some brokers manage by passing on the trades of clients who win often.
Do brokers hunt stops on purpose?
Most stops that look hunted are explained by the spread, news spikes and slippage. A sell trade’s stop is hit when the ask price reaches it, while most charts show only the bid. Deliberate manipulation is possible with poorly regulated firms, which is why our guide shows how to test it with your own evidence.
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