FIX API stands for Financial Information Exchange Application Programming Interface. It is a standardized protocol used by financial institutions, including banks, brokers, and trading platforms, to facilitate electronic communication and data exchange in the financial markets.
The FIX API allows for the seamless transmission of trade-related information, including order placement, order execution, market data, and trade confirmations, between different systems and participants in the financial industry. It enables connectivity and integration between various trading platforms, execution systems, and market data providers.
History of FIX API
FIX is an abbreviation for Financial Information eXchange.
API is an acronym that stands for Application Programming Interface and is a prevalent term in the IT industry.
FIX API is a non-proprietary, free, and open protocol controlled by FIX Protocol Ltd, a UK non-profit organization.
In the early 1990s, the protocol was designed to support equities trading and to replace phone trading.
Since then, the technology has advanced tremendously and is now used by thousands of electronic trading firms worldwide.
There are several versions of the FIX messaging protocol available today, however the most often used version is 4.4.
Advantages of FIX API
The FIX API offers several advantages for market participants in the financial industry. Here are some key benefits:
- Standardization: The FIX API provides a standardized messaging protocol that enables seamless communication and data exchange between different systems and market participants. It ensures consistent message formats and data structures, promoting interoperability and reducing integration efforts.
- Connectivity: The FIX API allows for reliable and efficient connectivity between various entities involved in trading, including buy-side firms, sell-side firms, exchanges, and trading platforms. It enables fast and secure transmission of trade-related information, orders, and market data.
- Speed and Efficiency: By using the FIX API, market participants can execute trades and exchange information with speed and efficiency. The API facilitates real-time order placement, execution, and confirmation, reducing manual processes and minimizing delays in trade execution.
- Customization and Flexibility: The FIX API offers flexibility for customization and integration with existing trading systems, risk management tools, and back-office systems. Market participants can tailor the API to their specific requirements and workflows, enabling seamless integration with their infrastructure.
- Market Access: The FIX API provides access to a wide range of markets and liquidity providers. It allows market participants to connect to multiple exchanges, execution venues, and liquidity pools, expanding their trading opportunities and improving market access.
- Algorithmic Trading: The FIX API is commonly used in algorithmic trading, enabling the automation and execution of trading strategies. It supports the rapid transmission of large volumes of orders and market data, facilitating the implementation of complex trading algorithms and strategies.
- Market Data Access: The FIX API allows market participants to receive real-time market data, including prices, quotes, and depth-of-market information, from exchanges and data providers. This timely access to market information aids in making informed trading decisions.
- Scalability: The FIX API is designed to handle high volumes of messages and transactions, making it scalable to accommodate growing trading volumes and increasing market participation.
Overall, the FIX API provides a robust and standardized framework for electronic trading communication. It enhances connectivity, speed, and efficiency in trade execution, facilitates integration with existing systems, and broadens market access for market participants in the financial industry.
Limitations of FIX API
The FIX API defines a fixed, inexhaustible set of transaction types that system developers must follow, all of which are targeted toward two basic types of exchange:
- Real-Time Market Data
- Order Execution & Management
FIX does not allow traders to query specifics about their trading account, such as equity, balance, available margin, open/closed orders, and so on.
FIX only allows for the gathering of real-time market data, not historical market data.
How Does FIX API Work
When you trade forex, you normally use a platform provided by your broker. As an example, consider MetaTrader 4, MetaTrader 5, or cTrader.
However, there is no platform to work with while trading via FIX API. To send instructions to and receive information from the FIX API, you must provide your own platform, interface, or algorithm.
The application you develop can be as simple or as complicated as you want it to be.
There are several FIX engines available today that significantly minimize the amount of time developers spend creating transfer logic, allowing them to focus more on application and trading logic.
QuickFIX is an example of a mature and widely used open-source software package.
A logon message in FIX API looks like this: