How to Use a Stock Trading API

As a former worker for a brokerage firm that caters to online traders, I was part of the team that crafted a Stock Trading API that charges customers for using the service. Most customers, however, would have some specific requests that may not be offered by our service. Most of these are data that are owned by our firm which are confidential and we would like to keep that way. Thus, we would simply respond by saying that the data they were looking for is not available over the API.

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Image: adapted from

Those little exchanges made it confusing for customers to fully understand what a stock trading API is. They often thought of the Stock Trading API as a form of storage wherein they could pull out certain information, but could not pull out others. Oh, how wrong they were!

The USB analogy, however, is a good place to start in trying to explain what a stock trading API is. Instead of a storage, stock trading API is the port where you insert the USB stick. Stock trading API makes it possible for the user, which is in this case the computer, to the broker firm which is the USB. The programmer’s of the clients of the stock trading APIs would then work with us to get the information they need through the API.

In this article, we will guide you into how exactly to use a Stock Trading API to get ahead of the curve against your trading competitors.

What is a Stock Trading API?

Before we dive into what a Stock Trading API is, we must first talk about API. API stands for Application Programming Interface and should be a term that you have already heard if you are working with something directly connected to the Internet. The keyword here is “Interface”. An API hides the complexities of the program underneath and lets you work with the services offered through a clearer and simpler channel.

When a service, like online stock trading, creates an API, this means that they are exposing some of the data and capabilities of their service to their customers. The programmers at the other end will then communicate with the service through the exposed channels. The most common API client that is being used nowadays makes use of HTTP and the secure version HTTPS.

Because an API will ge requests formatted in such a way that computer programs would understand, a special program, which is the client of the API, should translate your commands for it to properly communicate with the API. For instance, to ask for the current price of a certain stock, the API may take in information presented in a neat XML format which outlines the nature of your request. Doing this by hand may take some time and may not be the smartest thing to do.

On the other hand, the data received from the API will also need some formatting to be fully understood by the client program. To summarize, an API is basically an agreement between two separate programs on how to decode messages that they send each other.

A Stock Trading API is simply an implementation of an API wherein stock trading is the service. You might be wondering what benefits there are for using an API for stock trading if you have to create a program to properly convey messages across. The answer to this question will be discussed in the next section.

Why use a Stock Trading API

When online trading first started, most websites offered services complete with user interfaces in fancy websites and apps. So, some would ask why do we have to complicate what is currently working. However, there is a reason why traders would invest in APIs nowadays despite knowing that they require additional work.

The most obvious reason to use a Stock Trading API is to have the ability to customize the way you interact with the service that the brokerage firm is offering. For instance, you might prefer a different user experience than what has been more common in the mainstream. Or, you might want to conduct certain studies that require logging of data which the API service can offer you. This list of stock market API’s will give you a feel for the range of API’s available. While some of these can be done manually if the customer chooses to, the process cannot be automated unless the raw data cannot be accessed directly.

On the other end, the ones offering the service could limit the interactions that it offers to its customers. Confidential information, for instance, can be off limits to clients by default.

How a Stock Trading API Works

The three main proponents in a Stock Trading API is the user, which is the trader, the server while represents the broker, and the client, which is the program the user interacts with directly.

The brokerage firm will create the server and define the API interface as a set of rules that would dictate the way their customers would buy their service. They can choose to add as many kinds of services to offer, and the format by which to pass requests to clients.

Servers do not necessarily have to work simply as an interface but can be a repository of consumer information as well. For instance, your profile can be stored on the server and whenever you choose to avail of their service, they would have additional information about their client.

Clients are built upon the API interface design which would require knowledge about the server. These clients can be created on any platform as long as it is able to send and receive HTTP requests such as in a website, apps, or other kinds of platforms.

Finally, the user can be anyone from the ones that directly buy the access to the API, or indirectly to the customers of the clients.

Stock Trading API – Other thoughts

If you are not an IT practitioner wanting to use a stock trading API, then you might want to brush up on your programming ability first. You have to choose a platform first on where to build your clients, then you can start creating your own personal Stock Trading API client.