APIs are everywhere in today’s financial ecosystem — in fact, most people don’t even realise they are using one. To give this an historical context, prior to the advent of the internet, financial trading was restricted to being conducted over the phone. To buy stocks, all you had to do is call a broker and have them make a trade for you. Today, buying and selling of stock or financial securities is done online. The application of technology has advanced this process, and the use of APIs has made it simple and seamless.
The Definition of API
API (Application Programming Interface) is a computer program that allows a trading software to interact with another trading software. It’s like a messenger that takes your requests, tells the system what to do on your behalf, and then gives you the system’s response.
The use of APIs in Crypto Trading
Trading APIs help you interact with a specific trading system by allowing you to execute directly on a particular exchange. APIs are mostly used by online traders who run specific algorithmic models on their own trading systems. Through the algorithm, they receive live pricing and seamlessly and quickly execute trades.
Before You Trade…
Before you start trading using APIs, you must be able to create an API Master Key which allows you to sign requests when you execute trades, collect data and manage user accounts. The multi-factor authentication feature must also be enabled within the settings of your API.
- After creating the API Master Key and verifying your account, you can now go to the API keys. There is a new set of public/private API Keys that help you communicate with your API to create users, execute trades and authorise subscriptions. Security is a major concern when using APIs. As a result of this, you can verify the account you created using a 2FA protocol to view the Private API Key.
- To keep your account safe, you must keep your private and public keys secure; and you should never share the master keys with anyone. If you have users who prefer trading using their own devices, you can use the master keys to generate user keys, and share them with the users.
- Following this, you need to create a user that can interact directly with an exchange.
- A single user can manage several exchange accounts using a sole user API key, by linking the exchange accounts to it. The user can execute trades, collect account information, and access full order book data all through the connected exchanges. You must have the master keys to sign these requests.
- With User API keys, you can get account balances, connect an exchange account, execute trades, and get market data.
- The user API keys can only be signed with the master API key, and you can only create a user with the master key.
Using APIs, crypto trading becomes seamless and straightforward. APIs have significantly improved the process, and they are helping drive the cryptoasset markets to become an integral part of the traditional and more established global financial market.