What is a forex trading API?

APIs: An Application Programming Interface (API) is a kind of coding (or set of codes) that is used to enable connections – or, transactions – between software applications, databases, operating systems, and servers. One side of the transaction (usually known as the client) will send a request to access the data or features of an API-connected application or database. This request is received by the second party’s API (usually known as the server), which then either allows or denies the request based on a predefined set of rules (these are known as the API specifications). Forex trading APIs: When trading forex, CFDs, and other financial instruments, trading APIs allow a user’s front-end system to connect to the broker’s back-end system through an encrypted communication channel. Practically speaking, this means that traders who utilize APIs are not committed to using the application or platform supplied by their broker. Instead, traders have the option to use third-party software or their own custom platform or app while remaining connected to their forex broker’s trading ecosystem. Unlike a read-only API – which doesn’t permit trading or account operations – a trading API provides full access, allowing you to trade your brokerage account programmatically. Trading APIs provide the ability to send and cancel orders, retrieve live prices and historical data, and access account details such as balances and current market prices. APIs can even link traders’ automated trading algorithms to their forex broker’s platform (check out our guide to high-frequency trading to read more about the best algo trading software and automated HFT algorithms). terminalNote: Some API connections can be as rudimentary as a few lines of code or an excel spreadsheet, while others may be a fully-fledged trading platform. Popular forex trading platforms MetaTrader and cTrader are well-known examples of third-party software that connects to your forex broker via API. Read our MetaTrader guide to learn more about the platform, and check out our MetaTrader 5 guide to get an in-depth look at the newest version of the MetaTrader software. My MT4 vs MT5 guide details the differences between the two versions of MetaTrader to help you make an informed choice.

How do I connect a forex API to a broker?

Read your forex broker’s API documentation (or, API specifications) to understand the specific API connection requirements. It’s also important to read up on the available software development kits (SDKs) and on any supported programming languages. Next, you’ll need to make sure you have a demo or live account registered with your forex broker – you’ll need this to connect programmatically. Request API access. Once registered, you'll receive your API key (make sure to keep this safe) – this will allow you to securely connect and access the API. Once you’ve successfully connected to the API, you’ll likely need to debug and/or troubleshoot your code (or the third-party program you are connecting). After handling any necessary troubleshooting, you can start using basic commands, such as accessing account balances and viewing live market data. Then, move on to more complex operations such as order and trade management. keyDon't lose your (API) keys Connecting with a third-party program will require that you enter your API keys. API keys are passwords that let you access your account, much like the username and password required to log into your forex broker’s software. Make sure to keep your API keys as secure and protected as you would any password(s) for your brokerage account.

What is algorithmic trading?

Algorithmic trading involves using advanced computer algorithms, commonly referred to as "algos," to automate a trading strategy. Instead of manually executing trades, these algos do the heavy lifting by translating your strategy into code that your broker’s platform or API can understand and execute. When switched on, the algorithm autonomously handles tasks like adjusting trade sizes, setting take-profit levels, and managing risk, among other trading decisions that would otherwise require constant attention. In my experience, even simple algos can be effective additions to your trading strategy. For example, a basic algorithm might be set to open a position whenever the price of a currency crosses above a defined moving average, and close it when the price dips below. The complexity of your algorithm depends largely on the strategy you want to automate, the coding language you’re using, and the capabilities of your broker’s platform or API. I've worked on everything from basic strategies on TradingView using Pine Script, which is beginner-friendly, to more complex projects involving Python and deploying them through a FIX API. Learn more by reading my algo trading guide.

Best Forex Brokers with Trading APIs of 2024

Written by Steven Hatzakis
Edited by John Bringans
Fact-checked by Blain Reinkensmeyer

September 07, 2024

ForexBrokers.com has been reviewing online forex brokers for over eight years, and our reviews are the most cited in the industry. Each year, we collect thousands of data points and publish tens of thousands of words of research. Here's how we test.

I've been using Application Programming Interfaces (APIs) for many years. In this guide, I'll explain what APIs are, how they work, and clarify how (and why) they are used in forex trading.

I'll also go over the benefits (and drawbacks) that come with using APIs for forex trading, and help you pick the best forex broker for API trading.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 51% and 89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.