FIX API – How is it Used, and What Makes it Important for Trading Platforms?

FIX API - How is it Used, and What Makes it Important for Trading Platforms? 1

Previously, trading used to happen over the telephone, when investors connected with their brokers through classic telecommunications, providing financial advisory services and making investment decisions.

However, technological innovations have made this process easier, where financial decisions, services, procedures, and execution are done systematically and with minimum human interaction. Today’s trading platforms utilize APIs and software to process functions and execute market orders. 

This automated operation improves the trading experience and makes markets more efficient while allowing Forex brokerage companies to onboard more clients. Let’s discuss the role of FIX API in trading platforms and how it works.

How Are APIs Used?

Let’s start by defining APIs; application programming interfaces are protocols that facilitate data exchange between servers and platforms. These applications rely on a system of pre-determined orders and courses of action triggered when certain criteria are met.

APIs can be utilized in any service or application, such as the weather app on your mobile phone or newsfeed that processes information and updates from the source and timely broadcast them to your device.

How Does FIX API Work?

APIs play a major role in trading platforms, connecting different servers, receiving information from various sources, and communicating it to the client’s trader’s room.

For example, APIs connect the trading platform with multiple financial market servers to broadcast various price updates and market changes, which help the trader create their trading strategy and respond to updates and price action in a timely manner.

FIX API – Financial Information Exchange APIs are one type of interface used in trading software that deal with big data and exchange information with multiple markets and participants.

A lot of brokerage companies and liquidity companies use FIX API, which is a messaging protocol that exchanges market data and rates quickly and seamlessly.

FIX API is widely used in Forex trading, supporting platforms that deal with the largest financial trading market. However, it can also be used with other asset classes, like stocks, bonds, cryptos and other energy products. 

Most Forex brokerage firms use FIX API, utilizing its convenience and organized representation of data, which makes it one of the fastest protocols in data exchange. FIX APIs also work on advanced trading platforms that support trade automation and copy trading capabilities.

Benefits of FIX APIs

FIX APIs allow traders to receive market information and interact with multiple financial markets directly without relying on a platform like cTrader or MetaTrader. Thus, FIX can provide updated market prices and changes besides working as a bridge between the trader and the marketplace.

For traders, FIX API is useful to execute market orders quickly and with a minimum slippage rate, which makes trading more affordable and entails lower fees.

For developers, FIX data exchange is represented in a sophisticated, easy-to-read and interactive structure. FIX data is more accessible, applicable and scalable, which makes it more useful for trading software and brokers.

Nevertheless, FIX APIs work with different programming languages, which makes interacting and programming these protocols easier and more flexible without having to adapt to a specific language.

Advantages and Disadvantages of Using FIX APIs

FIX APIs may seem like the best programming interfaces for trading platforms and other service providers to thrive in the market. However, there are several advantages and drawbacks that users encounter.

Pros

  • FIX API powers fast data exchange using less input and bandwidth, which helps traders make quicker trading decisions.
  • FIX APIs interact with different programming languages, which makes communicating and data representation much easier.
  • Data representation of FIX protocols is more organized and easier to access and interact with.
  • FIX protocols power different financial markets and can be used to execute market orders in Forex, stocks, bonds, cryptos and other assets.

Cons

  • FIX APIs do not power historical data visualization and can only be used to communicate live market information.
  • Only a limited data set can be exchanged through FIX APIs. Information like account balance, equity and pending orders are not represented using FIX APIs.

Conclusion

APIs have evolved to become a vital part of trading platforms, exchanging data with various consoles and servers to provide real-time updates. FIX API is a commonly used protocol to exchange data with financial markets, facilitating trading and interacting directly with the Forex, stocks, bonds, and crypto markets. 

Several factors make FIX APIs superior to other protocols because they enable traders to interact and represent data in various programming languages and request high-volume data requests without relying on the trading platform.