Reference
Trading technology glossary: broker and platform terms, defined
Short, precise definitions of the terms that come up when building or running a brokerage — each linked to the page that goes deeper.
Execution and liquidity
- A-book
- An execution model in which the broker passes client orders to external liquidity providers and earns from markups or commissions rather than from client losses. See liquidity bridge development.
- B-book
- An execution model in which the broker takes the other side of client trades internally instead of sending them to a liquidity provider, and manages the resulting exposure itself.
- Hybrid execution
- Routing some client flow A-book and some B-book according to rules such as client group, symbol, trade size, or risk score.
- Liquidity provider (LP)
- A bank, non-bank market maker, or prime of prime that streams executable prices to a broker and fills its orders.
- Prime of prime (PoP)
- A firm that gives smaller brokers access to tier-one liquidity through its own prime brokerage relationships.
- Liquidity bridge
- Software that connects a broker's trading platform to its liquidity providers, streaming their prices in and routing client orders out, usually with aggregation and markups.
- Aggregation
- Combining quotes from several liquidity providers into one price stream, typically keeping the best bid and the best offer.
- Markup
- An amount a broker adds to its liquidity providers' raw spread before showing prices to clients.
- Smart order routing (SOR)
- Automatically choosing which liquidity provider receives an order, based on price, size, or other rules.
- Last look
- A practice in which a liquidity provider may accept or reject an order during a short window after receiving it at the quoted price.
- Slippage
- The difference between the price a client requested and the price at which the order was actually filled.
- Requote
- A dealer's response offering a new price when the requested price is no longer available; MetaTrader 5 reports it as return code 10004. See the troubleshooting guide.
- STP (straight-through processing)
- Passing client orders to liquidity providers without dealer intervention; brokers often use the term for A-book execution.
- ECN
- An electronic communication network, where orders are matched against prices from multiple participants; retail brokers use "ECN account" for raw-spread accounts charged a commission.
Trading platforms and APIs
- MetaTrader 5 (MT5)
- MetaQuotes' multi-asset trading platform, which brokers license as a trading server with client terminals and extend through APIs and plugins. See MT5 plugin development.
- MT5 Manager API
- The MetaTrader 5 interface that external applications — CRMs, risk systems, reports — use to manage accounts and read trades and positions.
- MT5 Server API (plugins)
- The interface for code that runs inside the MetaTrader 5 server and changes its behaviour, such as dynamic leverage or custom risk rules.
- MT5 Gateway API
- The MetaTrader 5 interface for connecting the platform to external trading systems, such as liquidity providers, and for custom data feeds.
- MT5 Web API
- MetaTrader 5's interface for web applications, used by custom web terminals and portals.
- cTrader
- Spotware's trading platform for brokers and prop firms, with its own client apps and APIs, including the cTrader Open API and FIX API. See trading platform integration.
- DXtrade
- Devexperts' multi-asset trading platform for banks and brokerages.
- Match-Trader
- Match-Trade Technologies' trading platform for brokers and prop firms.
- TradeLocker
- A trading platform for brokers and prop firms with built-in charting, risk tools, and execution.
- FIX protocol
- The Financial Information eXchange protocol: the standard message format for electronic trading, maintained by the FIX Trading Community. Brokers usually connect to liquidity providers over FIX 4.4.
- ExecutionReport (FIX 35=8)
- The FIX message that reports an order's status — new, partially filled, filled, or rejected.
- Drop copy
- A copy of execution reports sent to a separate session or system for monitoring and reconciliation.
- WebSocket
- A protocol for a persistent two-way connection between browser and server; web trading terminals use it to stream quotes and account updates. See trading terminal development.
- TradingView Advanced Charts
- TradingView's charting library that brokers embed in their own web terminals, subject to TradingView's licence terms.
Accounts, margin, and risk
- Margin
- The funds a trader must hold to open and keep a leveraged position.
- Leverage
- The ratio between position size and required margin; at 30:1, a position can be 30 times the margin held.
- Margin level
- Equity divided by used margin, as a percentage; brokers use it to trigger margin calls and stop-outs.
- Margin call
- A warning when a trader's margin level falls to a set threshold, asking them to add funds or reduce positions.
- Stop-out
- The automatic closing of a trader's positions when margin level falls to the broker's stop-out level; ESMA's retail CFD rules require close-out at 50% of required margin.
- Negative balance protection
- A guarantee that a retail client cannot lose more than the money in their account; mandatory for retail CFD clients under ESMA's rules.
- Swap (rollover)
- The financing adjustment applied to positions held overnight, reflecting the interest-rate difference between two currencies or the funding cost of an instrument.
- Exposure
- The broker's net open position in an instrument across the client trades it has not hedged.
- Toxic flow
- Client order flow that consistently profits at the broker's expense from unfair execution conditions — such as latency arbitrage — and is costly to keep in the B-book.
- Latency arbitrage
- Exploiting a delay between a broker's prices and faster market prices to trade on stale quotes.
Brokerage operations
- Trader's room
- The client portal where traders register, open accounts, deposit, withdraw, and manage documents. See forex CRM development.
- Forex CRM
- A CRM built for brokerages, combining the client lifecycle, sales and retention desks, the trader's room, and back-office operations.
- Introducing broker (IB)
- A partner who refers clients to a broker in exchange for rebates or commissions. See IB portal development.
- IB rebate
- A payment to an introducing broker for each unit of volume their clients trade, usually per lot.
- CPA (cost per acquisition)
- A fixed payment to a partner for each qualifying client, usually after a first deposit.
- FTD (first-time deposit)
- A client's first deposit — the key conversion event for broker sales teams.
- PSP (payment service provider)
- A company that processes card, bank, or alternative payments for the broker.
- Payment cascading
- Automatically retrying a declined payment through another payment service provider.
- Back office
- The internal systems a broker's staff use for clients, money movement, risk, and reporting.
Copy trading and prop trading
- Copy trading
- Automatically mirroring a strategy provider's trades into followers' own accounts in proportion to their size. See copy trading software development.
- PAMM (percentage allocation management module)
- A pooled account traded by a manager, with profit and loss allocated to investors by their share of the pool.
- MAM (multi-account manager)
- A setup in which a manager trades one master account and each trade is allocated across separate investor accounts by lot or percentage rules.
- High-water mark
- The highest value an investor's account has reached; performance fees are charged only on gains above it.
- Prop firm
- In retail trading, a firm that sells evaluation challenges and funds the traders who pass, sharing the profits. See prop firm software development.
- Prop challenge
- An evaluation in which a trader must reach profit targets without breaching drawdown and other rules to earn a funded account.
- Daily drawdown
- The maximum loss allowed within one trading day, measured from the day's starting balance or equity.
- Trailing drawdown
- A maximum-loss limit that moves up with the account's highest equity or balance.
Compliance and regulation
- KYC (know your customer)
- Verifying a client's identity and circumstances before and during the business relationship.
- AML (anti-money laundering)
- The controls that detect and prevent money laundering, including sanctions screening and transaction monitoring.
- PEP (politically exposed person)
- Someone in a prominent public role, subject to enhanced due diligence under anti-money-laundering rules.
- DORA
- The EU Digital Operational Resilience Act (Regulation 2022/2554), applied since 17 January 2025, covering ICT risk management, incident reporting, resilience testing, and third-party risk for financial entities.
- MiCA
- The EU Markets in Crypto-Assets Regulation (2023/1114), fully applicable since December 2024, which licenses crypto-asset service providers.
- ESMA CFD rules
- EU product-intervention rules for retail CFDs: leverage caps from 30:1 on major currency pairs to 2:1 on crypto, a 50% margin close-out rule, negative balance protection, and a standardised risk warning.
FAQ
What is a liquidity bridge in forex?
A liquidity bridge is software that connects a forex broker's trading platform to its liquidity providers. It streams their prices into the platform, usually aggregated and with markups applied, and routes client orders out to be filled, returning execution reports to the platform.
What is an MT5 plugin?
An MT5 plugin is code that runs inside the MetaTrader 5 server through MetaQuotes' Server API and changes how the server behaves — for example applying dynamic leverage, custom risk rules, or bonus logic to every account.
What is the difference between PAMM and MAM accounts?
In a PAMM account, investors' funds are pooled and a manager trades the pool, with profit and loss allocated by each investor's share. In a MAM setup, the manager trades one master account and each trade is allocated across separate investor accounts by lot or percentage rules.