An API (Application Programming Interface) allows your app to communicate easily with different data sources. In other words, you can integrate an API into your app to fetch relevant data from various sources. This way, you don’t have to gather data from several sources by yourself, aggregate it, and display it on your app. Thus, APIs are widely used across industries, including the financial markets. For example, popular APIs, like Exchange Rates API or FIX API, use reliable data sources to provide accurate exchange rates.
The FIX API Forex fosters a seamless flow of real-time data between market participants. It is widely used by liquidity providers, traders, and regulators. It allows you to address the market on an ongoing basis. But what is FIX API in Forex, and how is it helpful? This post will provide all the details.
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What is FIX API?
FIX API stands for Financial Information Exchange (FIX) API. It is essentially a messaging protocol that comes with a set of rules and methods to facilitate the electronic transfer of financial data.
Many people think that FIX API is exclusive to Forex trading. But that’s not the case. The API is, in fact, widely used by metals, stock, options exchanges, and futures. Tier-1 banks, retail traders, and retail Forex brokers also leverage FIX API for fast and efficient trade execution, access to liquidity pools, and more.
The API covers the markets of foreign exchange and global equities. It also supports futures, options, funds, and bonds. Additionally, it covers numerous security types.
Why Use a FIX API Forex?
FIX API is suitable for experienced traders. Here’s how it is helpful:
Flexibility
The API supports various programming languages, allowing traders to develop and implement trading strategies using their preferred language. This flexibility enables traders to create complex algorithms according to their preferences and requirements.
High-Speed Connection
One of the key features of FIX API for Forex trading is that it provides you with a high-speed connection directly to the trading servers. This means the API bypasses third-party platforms like MetaTrader 4. With this direct connectivity, traders typically see a low latency of around one millisecond. Thus, they can execute trades swiftly and quickly, which is crucial in fast-paced trading markets where every second matters.
Advanced Order Types
The API supports various order types. These include limit orders, market orders, stop orders, and more. This enables traders to implement advanced trading strategies and risk management techniques.
Standardized
FIX API is widely accepted in the Forex trading community. Hence, you can concurrently connect with multiple brokers. This way, you can monitor trading conditions like liquidity and spreads and identify potential trading opportunities across a wider array.
Scalability
The FIX API is backed by a robust infrastructure that can handle high trading volumes smoothly and efficiently. This is especially beneficial for institutional traders and high-frequency trading (HFT) firms that execute large volumes of trades within short timeframes.
Lightweight
The size of messages with FIX API is very small. Hence, you need to use minimal bandwidth to transmit them over the internet. The API also supports a high level of frequency. Thus, you can send messages hundreds of times per second.
What Type of Data does FIX API Facilitate?
FIX API facilitates the transfer of three distinct types of data. Let’s take a look at them:
Pre-Trade
This type of data includes important information streaming directly from exchange or market servers. It includes levels of liquidity, order flow, and depth-of-market statistics. It is helpful in crafting trading strategies and decisions.
Trade
Trade-related data refers to the information conducting trade. There are a variety of functions that involve data transfer through FIX. It includes order entry, confirmation, and execution.
Post-Trade
Post-trade data is very important for accurately storing records. It helps process and transfer asset ownership involving market-based transactions.
What is the FIX Protocol?
FIX essentially stands for the Financial Information exchange. It is an open messaging standard. And it isn’t controlled by any single individual or entity. FIX protocol package enables you to communicate in real-time with clients, traders, brokers, and liquidity providers.
The idea for the FIX protocol was first developed in 1992. At that time, brokers were using phone trading for daily operations, like receiving and placing orders. However, the process was prone to error. Also, being manual, it was highly inefficient. The companies seamlessly transitioned from old-school analog trading practices to cutting-edge online trading thanks to the FIX API.
Initially, a few New York-based equities trading firms adopted the technology. The most notable companies were Fidelity Investments and Salomon Brothers. The latter was ultimately acquired by Citigroup.
The early version of FIX provided support for pre-trade and trade operations for equities markets. However, technology has seen a major advancement throughout the years. Right now, the protocol supports the entire lifecycle of a financial transaction.
There are many versions of the FIX messaging protocol. The latest one is 5.0. However, 4.4 is the most widely applied version. It is massively popular among the Forex community.
Is FIX API Free?
Technically, the technology is free. However, this does not necessarily imply that you will have access to trade using FIX API from every Forex broker.
Because there is an administration cost, the broker has to deal with it. It leads to several requirements. For instance, brokers impose minimum deposit criteria. Also, they may impose minimum monthly trading volume criteria.
Also Read: SOAP vs REST
Who Owns FIX API?
FIX Protocol Ltd, a UK-based non-profit entity, owns FIX API. The technology is free and non-proprietary. It’s an open protocol. Hence, there is no obligation for membership. You can start using the API for free. However, companies can pay to enrol in the FIX trading community, which is very supportive.
Read: What Is an API Key?
What is FIX API used for in the Forex Community?
FIX API allows you to receive and distribute liquidity conveniently. Hence, numerous Forex market participants, including banks, market-makers, and prime brokers, rely on it. Asset managers, hedge funds, and corporations also utilize FIX to receive prices and submit orders. It is massively popular among both sell-side and buy-side firms. Besides, trading platforms and price aggregators comply with the FIX protocol.
How does FIX API Work?
FIX API is designed to work as a messaging protocol rather than an API. It enables two compatible parties to engage in buying or selling securities. It basically facilitates the transfer of messages between them.
You can get access to the Forex market by using a platform offered by their broker, like MetaTrader 4, Currenex, and cTrader. However, trading through FIX API is a bit different. There is no platform to interact with. Therefore, you have to follow a different approach to establish a connection with the recipient of the messages.
Read: What is an API?
FIX API is a server-to-server messaging protocol. It is bi-directional. Therefore, you need a predefined port to the host server to establish a connection using TCP. There is always a login message to start a FIX session. When it’s terminated, you will see a logoff message. You can use a variety of open-source libraries to build apps that connect with FIX API. It is compatible with C++, C# and Java programming languages.
Tags form the structure of a FIX message. The system should follow a certain piece of information based on each tag.
Here is an example of a logon message in FIX API version 4.4:
[crayon-66340f533f8c0414992504/]
What are the Limitations Of FIX API?
FIX does not allow you to query any specifics related to the actual trading account. Hence, you can’t query important data like Equity, Balance, and Available Margin. The API also doesn’t support historical market data. You can use it to collect only real-time data.
How can I Get Access to Free Exchange Rate Data?
You can get free foreign exchange rate data by using Exchange Rates API. It is very easy to use. You just need to write a few lines of code. You may acquire free Forex data for hundreds of different currencies using it.
Here is an example of using Exchange Rates API in Python:
[crayon-66340f533f8d2682068269/]
As you can see, the process is very simple. It involves writing just a few lines of code. It offers the quickest and easiest way to access FIX API trading.
Exchange Rates API offers a simple, quick, and reliable solution. It enables you to get real-time currency exchange rate data easily. It supports over two hundred currencies. The API updates the rate every 60 seconds and is backed by reliable data sources. Hence, you will always get accurate rates.
FAQ
What is FIX API trading?
Fix API is a messaging protocol that is widely used in the electronic trading industry. It enables you to communicate in real-time with clients, traders, brokers, and liquidity providers.
What is FIX API used for?
The API is used for various purposes. It allows you to receive and distribute liquidity conveniently. Asset managers, hedge funds, and corporations also use FIX to receive prices and submit orders.
What is the difference between FIX and rest API?
FIX is basically a messaging protocol that enables two compatible parties to engage in buying or selling securities. A REST API for exchange rates enables you to integrate real-time or historical exchange rate data into your apps.