Trading can be an intimidating thing to get to grips with, and often requires traders to learn new terminology and methodology before they can even get started. At IQDAX, we try to keep it simple – and to explain the terms and trading tools you need to know. Here’s a closer look at Trading API.
What is an API?
The term API stands for Application Programming Interface. This is a special infrastructure that allow computers or computer software to communicate, providing access to various features of a particular platform or software product by running a programming code based on a set of predefined protocols.
For traders, API is used to connect automated algorithmic trading systems and the trading broker, allowing financial transactions to take place and streaming relevant financial information to ensure the most accurate pricing is provided.
There are many benefits to using trading API. Ever since people first began trading online using automated software, this approach has become highly sought after. For example, FIX API is the most widely known protocol for receiving streaming market quotes and placing orders via industry standard Financial Information eXchange (FIX) protocol. It is used by various banks, prime brokers, and large hedge funds worldwide.
Some forms of API are becoming increasingly popular. Cryptocurrency trading APIs have also risen dramatically in popularity, thanks in large part to blockchain adoption and the enormous volatility of the crypto markets. This is because API allows data transfer much faster to take place swiftly between varying platforms and algorithmic traders in a highly volatile environment.
Today, most retail-based brokers provide APIs to enable seamless transactions and connect to financial markets with ease, as they can then provide up-to-the-tick pricing and place orders instantly without any delay.
The same tech has been adopted by the growing online retail trading scene, due to the same ease which it provides to the end user.
What are the Costs of Using APIs?
While fully acknowledging the benefits of API, it’s also important to acknowledge the risks, so traders know what they’re getting into at the outset.
APIs are usually provided to customers free of charge. However, there are instances where a trader may be asked to pay, and when requested, traders will need to make themselves aware of whether it is worth doing so.
Other expenses may incur renting a VPS (Virtual Private Server) or buying a ready-made algorithmic trading system or an automated expert trading advisor software.
There are several advantages to renting a VPS compared to personal computers, such as: guaranteed security, improved speed, 24/7 performance.
Using a VPS: Virtual Private Servers are usually very cheap compared to trading software starting from $50 per month or even less. However, VPS guarantees that all software and data that you run and store will be safe and active non-stop. Additionally, VPS will be active for 24 hours a day, and 7 days a week without the risk of overheating your personal computer.
Using 3rd-party trading software: There are endless horizons for prices for trading algorithms and automated trading systems, costing from $100 up to infinity, but we explicitly do not recommend buying or renting 3rd-party trading software due to their unpredictability, and always advise that our clients rely only on proprietary trading software.
Where will I Find an API?
As stated earlier in the blog, API can be found at many retail trading platforms and brokers frequently provide online documentation for APIs, allowing them to decipher the most valuable data.
At IQDAX, we fully support the implementation of API as an important part of software design, including in the online trading space. APIs can help traders immensely, when they’re designed correctly and used effectively.
To get started on your own trading journey, head to the official IQDAX platform and begin trading crypto, Forex and more. Find the IQDAX website online at https://www.iqdax.com/.