Automated buying and selling by the combination of API helps guarantee self-discipline and get rid of emotional components. The buying and selling bot won’t hesitate through the commerce since orders are executed robotically when buying and selling guidelines are met. As well as, automated buying and selling helps merchants keep away from human errors like getting into the mistaken order specs, and helps those that are afraid to make a remaining choice.
Supplies greater order entry velocity
With API, merchants can considerably enhance their order entry velocity since computer systems can promote and purchase cryptocurrency a lot sooner than human intelligence can. In some instances, getting out and in of a commerce just a few seconds earlier could make an enormous distinction in a commerce end result, particularly if the dealer has a excessive quantity or markets are risky.
As well as, utilizing API could make order administration simpler and assist merchants enhance general quantity. Most platforms supply merchants decrease buying and selling charges for every commerce if they’ve a comparatively excessive buying and selling quantity.
Backtesting
Backtesting refers back to the course of by which a dealer applies buying and selling guidelines to historic knowledge to find out the viability of a buying and selling technique or concept. Merchants can obtain historic knowledge from the crypto buying and selling & change platform through API, after which check whether or not a sure buying and selling plan works given previous outcomes, or not. After backtesting, merchants can consider the buying and selling technique expectancy — i.e. the common quantity a dealer expects to win or lose per unit of danger. Cautious backtesting might enhance buying and selling guidelines that merchants wish to set with buying and selling bots, or assist re-evaluate buying and selling methods.
Helps with diversification
Merchants who commerce belongings manually often take note of one or a number of markets. However with API, merchants can enhance diversification through the use of totally different buying and selling methods for sure markets. Furthermore, merchants can promote and purchase Ethereum, Ripple, Litecoin, and plenty of different belongings on the identical time, spreading the chance over varied belongings and re-balancing the crypto portfolio.
API additionally helps merchants accumulate details about quite a few markets from a number of buying and selling platforms to identify potential buying and selling alternatives. For instance, arbitrage buying and selling might be a lot simpler with API. Merchants might place orders throughout a number of exchanges concurrently to learn from worth modifications. Utilizing arbitrage buying and selling and different superior buying and selling strategies permits merchants to seek out new buying and selling choices that may be unattainable to execute manually.
Disadvantages of API Buying and selling
Monitoring
API buying and selling means that you can automate your trades but it surely doesn’t imply that automated buying and selling techniques don’t require monitoring. In case of connectivity points or system quirks, buying and selling techniques might expertise anomaly trades.
Nonetheless, if the system is monitored and you employ a sturdy and secure API, such occasions might be rapidly recognized or not seem in any respect.
Dependency on robust web connection
In the event you join the API with the buying and selling system operating by yourself laptop as a substitute of the crypto change’s server, then you definitely want a dependable energy supply. A failed web connection can set off sudden buying and selling outcomes, or orders may not be despatched to the market. Utilizing a server might aid you keep away from such conditions.
Over-optimization
Usually, over-optimization refers to eventualities when merchants “overuse” knowledge obtained by API for constructing buying and selling plans. For instance, some buying and selling platforms supply optimization instruments that permit merchants so as to add a variety of specified inputs and examine “which one works higher.” Including too many mixtures and eventualities might create buying and selling plans that look nice on paper, however carry out poorly on dwell markets.
Over-optimisation is often achieved by merchants who’re chasing “excellent” buying and selling plans. Merchants generally incorrectly assume {that a} buying and selling plan shouldn’t have any flaws and will carry out solely worthwhile trades throughout backtesting. Over-optimisation reveals that receiving quite a lot of knowledge might generally result in evaluation paralysis, particularly if merchants don’t know the right way to use the info for buying and selling.
Proprietary software program might be costly and complex
Buying and selling platforms often supply API without cost. With out API, it will be tough for crypto exchanges to supply prospects superior buying and selling providers. Nonetheless, if customers wish to automate their trades they both use their very own buying and selling system, or implement API in proprietary software program. Third-party software program could also be costly or oriented towards tech-savvy merchants, making API buying and selling much less reasonably priced for merchants.
Advantages of Utilizing CEX.IO API
A number of API options
CEX.IO presents two crypto buying and selling API options, permitting each retail merchants and establishments to learn from automated buying and selling.
