CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73.43% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Read full risk warning.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

What Is API Trading & How Can You Use It?

Explore how to understand trading APIs

Filip Dimkovski - Writer for Fortrade
By Filip Dimkovski
Edited by Dyllan Hopewell

Published February 22, 2024.

API Trading stocks

Technology has revolutionized the way we trade in today's fast-paced and interconnected world. With the rise of digital platforms, trading can now be done almost instantly, with a click of a button, primarily thanks to the power of technology.

However, as the market becomes more competitive and complex, traders must learn to continuously adapt. This is where API trading comes into play—a method that utilizes technology to streamline the trading process.

» Just starting out? Here's our beginner guide to stock trading



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What Is a Trading API?

An Application Programming Interface, or API, is a set of rules and protocols that software programs use to communicate with one another. Simply put, it's like a menu in a restaurant—you, the customer, ask for a specific dish and the kitchen (another software) prepares and serves that dish based on the instructions in the menu (API).

Of course, APIs aren't exclusive to the financial markets. In fact, they are used extensively across various industries, serving as the backbone of many services we use daily. For instance, when you use an app like Uber, it pulls data from Google Maps using APIs.

A trading API allows traders to execute trades automatically based on pre-set criteria. This not only speeds up the trading process but also reduces the chance of human error. The use of APIs in trading has evolved over the years, with more advanced APIs now offering features such as real-time pricing, historical data access, and even risk modeling.

» Ready to continue learning about trading? Head to our free Forex & CFD beginner's trading courses

Examples of Stock Trading APIs

Finnhub

Finnhub is a popular stock market data provider that offers real-time pricing and historical data through its APIs. It also has advanced features such as sentiment analysis and technical indicators that can aid traders in their decision-making process. With comprehensive coverage of financial data, the platform covers a wide range of global markets not just limited to stocks but also includes ETFs, forex, and cryptocurrencies.

Alpha Vantage

Similar to Finnhub, Alpha Vantage offers real-time and historical stock market data through its APIs. While the extent of its data is not as rich as with other stock trading APIs, Alpha Vantage is a suitable free stock market API, as its free plan allows up to 500 API requests per day.

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Financial Modeling Prep

Financial Modeling Prep is one of the best stock market data providers, offering real-time pricing and financial statements through its API service. It also has incredibly advanced and detailed features, such as price targets, insider trading data, and analyst ratings to aid traders in their decision-making process. Its free plan offers 250 API requests per day, which may suffice for most entry-level traders.

» Need an alternative trading method? See the fundamentals of CFD stock trading

Why Use an API for Trading?

API trading offers automation and efficiency. By leveraging a trading API, traders can set specific criteria for trade execution, thus automating the process and eliminating the need for constant manual input. This allows for a streamlined trading experience, freeing up valuable time that can be utilized for other important aspects, such as research and strategy planning.

The versatility of trading APIs allows for a highly customizable trading experience. Traders can tailor their trading strategies to match their specific needs and risk tolerance, thereby creating a more personalized and efficient trading process.

» New to forex? See our top forex day trading strategies