How to use the API for cryptocurrency trading bots?

Let's find out what the API is and what role they play in cryptocurrency trading.

What is an API?

API isapplication programming interface whichHelps applications interact with each other. In everyday life, we constantly use the API, but we do not always realize that we are dealing with them.

For example, when we search the Internet for a house to buy, we find a website in which the site’s API is used to obtain information from the corresponding real estate database of this resource.

Here are examples of commonly used APIs:

• Google Maps, MapQuestetc. – API, which provides access to information from satellites and GPS maps;
• Yahoo finance– an API that provides financial statistics data and allows you to create charts based on such data;
• Doordash– API, which allows you to obtain information from restaurant menus;
• E-trade– API, which allows you to view prices for certain securities.

In essence, APIs are created by developers alone forothers as a set of ready-made classes, functions, procedures, structures and constants in a certain format - so that in the end the user on another site or application can get information that is convenient for understanding.

For example, if E * TRADE did not have an API thatIf you can get the latest data on stock prices, then investors would have to call the real trading platform and speak with a broker who can communicate such data by looking at the computer screen of the company's internal network. (Although, this network should receive such data from somewhere using the API).

So, to get into your applicationExact time in London, Singapore or Dubai, using the API from the corresponding resource. To see a picture from the NASA space telescope, you can also use the corresponding API from the website of this agency.

Cryptocurrency APIs

Cryptocurrency APIs allow you to receive up-to-date information on digital currencies and their prices from such sites as Binance, Coinbase or others. In particular, these may be:

• information on the current price of a particular cryptocurrency;
• trade volume data;
• opening, closing, high and low prices, etc .;
• historical data on the trading of certain cryptocurrencies;
• news feeds reflecting the situation in the cryptocurrency market;
• rating of coins by trading volume, popularity, etc.

Having received such data, you can use it to optimize trading manually or using bots, as well as for other purposes, for example, to post information on your website.

Placement of deals using the API

Professional traders use the API toplacing transactions on cryptocurrency exchanges. The APIs in this case allow you to set the transaction time, entry / exit point, take profit and stop loss levels, etc.

APIs also allow traders to improve theirtransactions through the use of combined data. For example, the price API can be combined with data from the trading history when placing a transaction in order to analyze the possibility of making a profit.

How APIs are Used in Cryptocurrency Trading Bots

Trading bots also use the API, and place trades using such data. Here are the most common examples of how cryptocurrency trading bots work:

• Arbitrage trading botsexplore the cryptocurrency market using the API onsubject to arbitrage profit opportunities and place appropriate trades. For example, if a bot sees that a particular cryptocurrency is undervalued on one exchange and overvalued on another, then this becomes a signal to make a transaction that allows you to make a profit due to the difference in prices on the exchanges;
• Impulse Trading Botsuse the API of cryptocurrency platforms forcalculating the strength of the momentum of the price movement of a cryptocurrency, trying to “predict” the price (for example, its growth) and placing the appropriate trade to make a profit;
• Trading bots using rule / rotation law (“The market does not manifest itself equally twice in a row”).APIs in this case are used to calculateaverage price for a certain period of time. If the price deviates too much from this level, then the mean reversion principle tells the bot that the price will revert to the mean and that it is time to place an appropriate trade to make a profit.

Are APIs safe to use?

Thus, modern automatedcryptocurrency trading relies heavily on APIs that transmit information to trading bots that can analyze the market situation and make decisions that are beneficial to users.

In essence, an API is a use in itsapplications of publicly available (most often) data for profit, and it is unlikely that this is aimed at stealing your funds. Your security can only be compromised if an attacker can get into your account with wallets and funds.

On the other hand, excessive trust in bots,relying on the API can be risky, as they may not take into account some variables that are important for your strategy (this will also depend on the settings and features of the code of the bot itself).

You should also make sure that the bot does not risk the entire amount that is contained in your wallet, but only uses the part of it that you are willing to risk.

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