Whether you're familiar with Quadency or follow crypto in general, you've probably heard the term 'API Trading.' APIs are used everywhere in today's digital world, but not many investors know what they are or how powerful they can be for trading.
So in today's article we break down how they work at the most basic level, and will also introduce you to API trading.
API stands for Application Programming Interface. Most simply, it's a standard way for two systems to communicate with each other. You can imagine an API as a server that takes your order at the restaurant and tells the chef how you'd like your meal — who then also brings it to you from the kitchen when ready.
What can I do with APIs?
In two words: a lot! You may not realize it but you're probably using dozens of services right now that rely on APIs. Here's a few common examples:
Flight Booking Comparison Sites
Many travelers start their booking process with services like Skyscanner or Kayak to find the best fares. These services rely heavily on APIs to function - such as those needed to extract flight data like price, seats available, schedules, etc. in real time from various airlines. This allows them to compare hundreds of airline offers simultaneously to show you the best deal for your preferred travel.
Ride Share Apps
If you live in or near a city, no doubt you have used apps like Uber, Lyft, or Grab to book a taxi. These services depend on GPS + mapping technology to match their drivers and customers in real time. This is often made possible through the Google Maps API - which also provides data to calculate directions, distances, and pricing. Without these API connections, each of these apps would have to create their own mapping systems!
In crypto, you'll often come across public APIs, used to provide real-time market data. Services from crypto tax apps to portfolio trackers allow for aggregating this public data - including an asset price, trading volume on said asset, and much more - from multiple exchanges.
But an ever-growing use of APIs is dedicated primarily to more private needs like trading, as with Quadency. When setting up the API trading connection to Quadency, your exchange will ask you to generate private API keys, generally a couple of phrases called a Key and Secret, with a 3rd 'passphrase' possibly used as well.
Varying levels of permissions can be assigned to each set of keys you create, so be sure to limit them only to what you plan to use to best ensure your privacy and security.
As you can see from the image above, we use API connections to link your exchange account and enable trading directly from the Quadency platform. It may sound complex, but this simple setup process only takes a couple of minutes - even for novice, less tech-savvy traders. All you need to do is:
- Create a set of API keys on your preferred crypto exchange(s)
- Head to Account Settings in Quadency and click Add Account
- Select the exchange and enter the keys
- That's it! Within minutes, all your exchange account data will sync with Quadency and you can start trading.
Linking an exchange via an API connection is a very easy thing to do. You can connect all your exchanges to Quadency following the same process - head over to our support section on exchange linking to learn more!
Once your exchange account is connected to Quadency, you can start trading on that account directly from the platform. The API connection offers numerous possibilities including:
- Portfolio tracking
- Manual and automated trading
- Access to historical data for backtesting
One benefit of API trading that many investors may not realize is that when exchanges experience outages during trading peaks or user demand spikes, their API trading systems are often still operational.
This means that API trading via Quadency would allow you to keep trading - manually or with bots - even when your exchange's website or app is down or otherwise unaccessible.
How secure is it?
There are usually 3 levels of permissions for private use APIs in crypto:
- Read (view assets)
- Write (deposit assets, trade)
- Transfer/Withdraw (move/remove assets)
Trading via API keys is very safe + secure, as long as you set the correct permissions and follow industry best practices like enabling 2FA on all your accounts.
For extra safeguards in case you accidentally share your keys with a 3rd party, Quadency always reminds users NOT to enable fund transfer or withdrawal permissions.
All exchange connections are different, making it very difficult for the average trader to transact via API with multiple exchanges simultaneously.
Fortunately, Quadency not only allows investors to link and trade their individual accounts via exchange API, but also offers an advanced, universal trading API for investors trading on multiple exchanges or even companies integrating trading functionality into their own applications.
At the time of this writing, the Quadency API collects and unifies data from 13 leading exchanges. This allows developers and advanced traders to focus on creating and trading, instead of managing constantly changing exchange connections.
Our standardized API gives you access to historical and real-time public data, while also enabling private data to manage your portfolio and execute your orders.
The API is available on our Unlimited and Institutional plans.
APIs might sound scary at first, but they are a powerful tool for beginners, advanced traders, and even institutional investors. They allow for real-time trading and market data to flow seamlessly between different systems in a highly secure environment.
Thanks to APIs, Quadency users can access a unified data flow to trade and automate strategies on multiple exchanges simultaneously.