In this fast-paced environment, real-time data access is the only way to maintain an edge in the markets and reap the benefits of your trades and investments.
However, manually analyzing all the market movements is a very difficult task, and often ends in disaster for the participants. In such cases, the power of APIs or Application Programming Interfaces comes into play.
With the help of APIs, data can be shared and integrated in a better way, and enable transactional processes between components of the solution stack.
Stock APIs are now being used by traders and investors to extract structured information from complex market data, which is changing investment patterns.
Stock APIs: Changing the stock market landscape
Algorithmic trading in India is still in its infancy, accounting for 50-60% of the total trading volume. Previously, they were used only by established institutions and brokers.
However, as trading API solutions continue to grow in popularity, there are now limitless opportunities for retail investors as well. Today, investors are becoming more aware and have easy access to the trading APIs offered by stockbrokers due to the vast knowledge on the Internet.
APIs act as a link between various trading algorithm systems and the client’s brokerage house when executing orders in the financial market.
Here’s how trading APIs are helping market participants streamline their operations:
Proper trading sessions
The reason these APIs are preferred is that they facilitate accurate trading and remove unnecessary emotional elements. Since orders are executed automatically when the trading rules are met, the trading bot does not hesitate when trading.
Additionally, automated trading supports people who are hesitant to make decisions by preventing human errors such as incorrect order specifications.
Enable high speed trading
Because algorithms can buy and sell stocks faster than human intelligence, traders can use APIs to dramatically speed up the order entry process.
Sometimes entering and exiting a trade a few seconds before the trader has high volume or the markets are volatile can have a huge impact on the outcome of the trade.
Additionally, using APIs allows traders to add aggregate volumes and simplify order management. If traders have a high trading volume, most platforms will offer them a low turnover per trade.
Provide support testing strategies
Today, backtesting a business strategy is a critical step before implementing a business. Backtesting involves using historical data and speculative past trades to analyze and apply trading strategies.
A trading strategy’s expected time, or the average amount a trader expects to win or lose at each risk level, can be evaluated by traders after back-testing.
A careful check can help traders re-evaluate trading strategies or improve the trading rules they want to set up with trading bots.
Ability to organize for smart returns
For retail investors to achieve efficiency, APIs help cut block deals to avoid impact on share prices.
By mechanically executing entries and exits based on conditions or levels in this scenario, the API can execute trading instructions and reduce the risk of interacting with trading sentiments.
Additionally, high frequency trades used to generate intelligent returns can be very effective when used in trading spreads, trading APIs in arbitrage opportunities.
It gives investors and traders the option of real-time data exchange and automatic trade execution, which gives them a competitive advantage over other traders.
Choosing the right API
As the benefits of APIs are known, it is important to know how to choose the right API for their needs.
Delay: The term “latency” describes the time it takes for the Stock Market API to send data from the source to the requesting application. APIs with low latency send data faster and more accurately than those with high latency.
Source of information: It is important to choose stock APIs that provide access to a variety of financial data, including stocks, exchanges, forex, news, commodities, options and economic data.
Size measurementSince the stock market is one of the most volatile industries today, the API investors choose should be sized to monitor stock market fluctuations.
Secure application; When choosing a stock market API, investors should ensure that the provider uses secure servers and systems because confidential information is at risk.
Finally, an API should be chosen that is adaptable and meets individual needs.
All things considered
The widespread use of trading APIs can transform the world of trading and investing by fostering greater efficiency and a culture of equity.
Investment Platform developments are made possible by APIs, which provide new-age technology with unique client interfaces, functionality and usability.
In addition, it combines various technologies into one system that includes reporting, portfolio management and budget planning.
With so many benefits, APIs are becoming popular in today’s stock market and are expected to be around for a very long time.
(The author is a founder at FinDoc)
(Disclaimer: The advice, suggestions, opinions and views given by the experts are their own. These do not represent the views of The Economic Times)