What Is Crypto API Trading?
Most times you may be encountering the acronym API. What is an API? API stands for Application Programming Interface. API bridges the interaction of one software application to another. API acts as a messenger that receives your requests and then tells a platform, and then the platform gives you back its response. It is so much the same as booking a flight online with your desired departure date and place of destination together with the number of passengers. The platform’s API would search for different airlines that including the price and you can choose the one that suits you and finalize the transaction. Or have you tried booking for hotel accommodations? The API of the comparison site will do the shopping and all you have to do is choose the accommodation that will fit your schedule and the amenities you want to avail. Examples of these would be Expedia and Trivago.
Trading through an API
A trading API facilitates your interaction with a trading system and enables you to execute your trade directly on the exchange platform. Trading APIs are necessary tools for traders who are running manual or automatic algorithmic models on their trading systems especially when they are monitoring live pricings. It will enable them to execute trades each time their model produces a trading signal if they so desire. Proprietary trading firms and hedge funds sparingly use trading APIs in their algorithmic trading executions. Individual investors are also into trading APIs as recommended by online brokerages and as of late by different cryptocurrency exchanges. Examples are Binance, Coinbase Pro, Bitfinex, and Bittrex who are offering trading APIs to their customers.
APIs in Cryptocurrency Trading
Crypto APIs are there to supply you with information on cryptocurrencies. While some APIs provide useful data, others help you to execute your trades. There are other things an API can get done:
- It provides you with information about the current prices of cryptocurrencies
- It shows you trading volumes, opens, closes, low and high points, and others
- It provides you with historical data
- It shows you news feeds tied up to the crypto market
- It provides you with a ranking of top coins by their overall trading volume, popularity, and other statistical data
Developers can maximize the use of APIs in building their own trading resources. Others may just simply use APIs which are already incorporated in trading websites.
Crypto Trading Bots
As APIs provide data, trading bots place trades based on data provided. Some examples include:
- Arbitrage trading bots scouts the market with arbitrage opportunities then takes advantage of profit. It can also execute a trade to buy low and sell high if it finds an underpriced currency in a market but overvalued in another.
- Momentum trading bots can calculate the strength of price actions whose momentum can create inertia. The bot can place a trade when there is enough inertia which the trader can make a profit from if the direction continues.
- Mean-reversion trading bots can calculate the mean price based on a dictated duration. The bot places a trade whenever an observed deviation is about to reverse and places a trade in that direction.
APIs, Bots, and Trading Safety
APIs simply harvest and process data to benefit you and there is no risk in that so as long as no other can access your account information. Bots, too, just process data before placing trades. They cannot provide you with other variables that you need to strategize. Do not put your trust too much on bots that combine several APIs. Get hold, instead, of API-based bots that adjust accordingly to the capital you are willing to risk. The bots will use an API to calculate the right amount you need to invest in a trade, thereby mitigating your exposure to unnecessary risk.
The backbone of fully-automated trading rests in APIs. They collect data for trading bots to analyze before executing an informed trade. These are the benefits you can get from using an API.
APIs are fast integrating into the cryptocurrency trader’s trading tools which testifies to the evolving system of crypto assets trading. The more professional and advanced these traders are, expect the rise of algorithmic trading and API usage. Trading programs exploiting arbitrage opportunities can turn the cryptocurrency market more efficient and liquid, thereby attracting more traditional investors to the crypto fore. Market maturation will not fail to attract investors of all classes as we are now heading to become part of the global financial establishment. APIs for their part, will also evolve and be so integral in the cryptocurrency market development as regulations take shape and institutional funds come pouring in.
eQapital is relevant now more than ever in catering to the present needs of the digital investor. Financial services from Trust, Custody, Exchange, Transfer, to Asset Management needs are strategized on blockchain to empower you to control your funds, whether fiat or crypto. Security is in place with AML/KYC/CFT procedures. Our friendly eQapital Team is always ready to assist you 24/7. Give us a call now and be partners towards your progressive financial health goals.