What is FIX API


The world’s financial system grows every year in its volume. New software, means of communication and information transfer are created. Progress in the industry has led to the need for fast data transfer to obtain the actual prices. To help with this problem, a specialized FIX protocol was created.

This FIX (Financial Information exchange) protocol allows to instantly, in real time, share data between exchange sites. This protocol ensures the timely receipt of financial information, namely: actual quotations, market bids, news events, etc.

The FIX Protocol was created as an idea of implementing streaming messaging between the brokerage and institutional customers. The first companies that not only introduced this technology but also started to use it, were Fidelity Investments and Salomon Brothers. Thanks to these companies, FIX protocol has gained such popularity and completely replaced the boring phone conversations. All messages, as well as information about the buy/sell of a financial asset came into a computer, by which it was possible to take a decision about opening the deal.

Today, these two companies were followed by all major marketplaces and brokerage companies in the world. FIX Protocol has become an international standard for information exchange. At the moment, FIX works in two phases, that is, in the mode of financial data delivery, as well as the mode of data description. And if in the first mode, the players receive market information (for example quotation values), then in the second mode this information is fully decrypted. Thus, both algorithmic software and professional traders can use this data in their analysis and trading.

In addition to large companies, simple market traders can get access to this protocol with FIX API. This allows them to trade directly at the liquidity providers, bypassing the servers of FIX API broker companies.

Key advantages of FIX API protocol:

  • Help receive market quotations;
  • Up-to-date information directly from the market;
  • High speed of the trading order execution;
  • No delays and slippage.

As this protocol allows to receive the price information faster, a lot of trading robots was created, which trade on the principle of FIX API. A robot can instantly respond to any market movement, which allows to perform more precise market quotes analysis, and make trade deals.

FIX API is also successfully used in “manual” trading, because it gives a trader the same advantages. This allows them to trade according to their own strategies, make more precise and timely deals.

Timely receipt of prices allows the use of FIX API arbitrage trade, the methodology ofFIX API latency, or FIX API 2-leg arbitrage, which is about looking for price differences. After all, the main point for successful trading, according to these strategies, is in receiving quotes at one broker a bit ahead in time, and comparing them with a second broker’s. The broker which provides the ability to trade via FIX API is an ideal solution for these arbitrage techniques. Same as with arbitration, scalping operations are carried out with the help of FIX API due to the lack of large spreads and slippages. Direct access to quotations expands the list of tools that you can use in scalping and which are not available for the effective implementation of this strategy in “manual” trading.

FIX API allows to improve and optimize trading on the Forex market, as the quotations received on this principle are more accurate. In turn, the indicators provide quality signals based on this information. Using this protocol has a direct influence on the financial result of trading, improving its upward dynamics.

 

How to choose your trading strategy according to your trading preferences?


Thanks to movies that create an image of a successful person, as well as to financial press and macro economic news, the sphere of financial markets is now considered as one of the best and most promising occupations. However, not everyone is able to succeed there, because approximately 95% of all those who traded on the market, failed sooner or later.

The whole point is that every beginner presumed it to be very simple. There are only 2 buttons, sell and buy, and a lot of techniques can be found online, that teach “to click those buttons the right way”. But the fact is that the market has to be thoroughly understood. You need to know what and who drive the price. This question has to be answered by a professional FIX API trader themselves. Their trading system may help them with that. Today I will make a small FIX API tutorial, in which I will discuss the three key components that help you create or select a trading system based on your preferences.

A trading system is a set of rules and fundamental principles of market analysis and trading. At its core, is a trading algorithm that allows the trader to successful trade via FIX API Forex.

We need to understand that profitable trading is possible only when you have created your trading system. You’ll know exactly which signals does the trading system generate, in which phase or state the market is, which asset you should buy or sell, which amount of funds may be put into a deal, and so on.

Eventually, after a lengthy search of different paid and free trading systems, each trader comes to outlining their own strategy. And it doesn’t have to be your own indicator, mathematical model, or a new combination of indicators not used previously. No. Known and already quite tested analysis methods comprise a comprehensive  algorithm.

I do not deny the fact that if you use the strategies that you have been trained on, you may not receive profit. However, profitability will always be lower than that of someone who came up with this system. It is therefore important to create your own system on the basis of general rules.

Today we’ll look at what exactly should a trading system include so that it fits you.

I distinguish three key points in creating a trading system, which in the future may become the basis of your own trading algorithm.

  1. The strategy of the trading system
  2. The tactics of the trading system
  3. Capital management

If you create these three pillars of a future trading system, you will be able to navigate it and use it hundred-percent.

Strategy of a trading system is a global vision of your trading. What moves the market is what shapes its further movement. (For example, the interest rate of the Central Bank, which determines the value of the currency on the Forex market, the direction of the trend, or in which Elliot wave will the quotations be). Strategy can characterize the market as a whole as well as any separate asset.

Tactics of a trading system is the point-by-point interaction with a specific situation or trading signal. If by strategy we identify long-term prospects, the tactics help us decide how to act here and now. It is about the tactics when you need to decide which elements of analysis you will apply in your trade. Whether crossing the moving averages, support and resistance level breakthrough, or FIX API Arbitrage.

In order to understand which elements should be present in the tactics, you need to define your personal trade preferences. Will there be trade on all currency pairs or a certain list of them? What methods have you used in the analysis that fit you most? How many filters will be in decision-making? How will the signals from the trading system  be selected?

Upon answering these questions, you can easily make your own trading algorithm that will be simple and straightforward.

Asset management also plays an important role, because thanks to it, you will be able to manage risks. It also helps to identify the desired rate of return. But most important here is the risk. Effective money management helps to achieve success in trading on marginal markets, but learning the techniques by itself, without the necessary knowledge of building trading systems, and psychological stability will not make a trader successful. Maintaning a sensible balance between the potential sum of profits and losses, the trader gets the ability to competently work with capital.

These are the three key components, upon which a trading system for trading on FIXAPIForex must be based. Upon combining these components and meeting all the prerequisites, you can create your own trading system, which is perfectly suited to fit your trading style.

 

2 Leg Latency Arbitrage


Every experienced trader, with the experience of 10 years or more, has surely noticed how the trading process has changed. The set of instruments, derivative financial assets, as well as methods of market analysis, has expanded. Each one left something behind and introduced new ways of understanding market trends, be that Elliott waves or Williams’ “Trading Chaos”. Some of the publicly available trading systems are still being successfully used. Complex strategies became more understandable and easier to use due to automated algorithms. What was previously difficult to implement, today is easily applied in trading. All this thanks to the HFT trading which allows for such a trade that is difficult for an ordinary trader.

The essence of HFT trading lies in the fast market analysis and performing buy and sell operations automatically with the help of a FIX API broker. Thus, it allows to increase yield and trading result.

HFT is now used by nearly all investment companies and is attractive for its ease to private traders. It is HFT that allows using such kinds of trade which are quite difficult or practically impossible to perform in “manual mode”. FIX API 2 Leg Latency Arbitrage is one of the key types of this strategy.

2 leg latency arbitrage, or as it is also called, “hedge arbitrage” is a kind of arbitrage trade, where at the same time but at different brokers buy and sell positions of the same currency pair are opened.

For reference: arbitration is a trading strategy based on high-frequency trading for deals on speculative positions on exchange rate differences of the same asset (or a derivative), usually on different trading venues.

Performing transactions via FIX API forex broker is a required prerequisite for the successful operation of the 2 leg latency arbitrage.

The operating principle of the 2 leg latency arbitrage

The whole point of this technique lies in its name. The robot simultaneously buys and sells the same asset. This requires two different platforms on which  the trading will be carried out. As a rule, these are two different brokerage firms. But what is the point? It’s a kind of a lock, with which it is not possible to either increase profit nor loss.

In order to understand the logic of a trading robot, let’s look at an example.

EURUSD currency pair at one broker has the value of 1.07255, and 1.07250 at the second one. It is these 5 pips that bring the profit. Robot opens the sell at the first broker, and the buy at the second broker. You do not need to define which broker would be “faster” or “slower”, which still has to be done in another form of arbitrage trade, FIX API latency arbitrage.

What are the advantages of the 2 leg latency arbitrage?

 

The key advantage of this type of trading lies in its simplicity. As stated above, you do not have to define which broker provides faster quotations. The dependence on continuous monitoring of the trading specifications of a brokerage company is removed.

The second advantage is that such transactions are difficult to track, because the trade can be held for a few seconds. It may sometimes be difficult for the broker to follow the logic of the operations, because the second part of the strategy is traded at another company. Thus, the broker can not affect the result of a trade.

Trading in the financial market attracts more and more attention due to its simplicity. With the help of the available programming languages for the FIX API – java, C# or python, you can create a full-fledged trading algorithm which would take into account all subtleties of HFT trading. Unrestricted access to any trading site in the world allows you to make transactions from the comfort of your home and turn the algorithmic trading into a source of passive income.

 

High-frequency trading


The development of information technologies and automated systems, according to the Statistical Office of the United States, has risen more than 5 times over the past 10 years, and with each year continues to increase rapidly. New online payment acceptance services, automated platforms for the sale of goods and services, as well as fundraisers, are being created. The whole world has become digitized, and interaction with the Internet today can be done in one click. The financial markets are also following these trends.

Highly technological products are used by institutional investors (banks, hedge funds), as well as by experienced individual traders. All that is needed for the trader is to repeatedly engage in a profitable algorithm with the help of the most popular programming languages for the FIX API Protocol, that is, FIX API C#, FIX API python, FIX API Java. So why not automate it?

High-frequency trading, or HFT, is trading on the financial market which allows for high speed buy/sell transactions of a financial instrument. In other words, it is a type of trade, where the deals are performed by a robot algorithm. FIX API trader can trade directly with the interbank market which allows to bypass the latencies on the part of the broker’s servers and thus “play” on them. Every trader has their own trading system: the set of rules and principles, by which the trade is carried out. This system can be automated.

As HFT trade is lead by robots, they, in a fraction of a second, can carry out an analysis of the asset, and in the same fraction of a second can decide to enter a short or long position. This provides a clear advantage due to fixing a position via FIX API Protocol, which is used by almost all the world’s financial sites. In particular, one of the leaders in this sphere is CQG FIX API.

What is the working principle of High-frequency trading

At the time of the exchange opening, publication of financial reports of companies, or changes of the Central Bank monetary policy, the market experiences heightened volatility. This is the moment where the maximum number of such trade deals is performed. Due to the expansion of the spread, arbitrage correlation or the quotations’ volatility difference (typically those of the currency pairs), HFT robots capture the micro results, and thus a huge number of transactions allows you to get a positive rate of return. Of course this requires a FIX API broker that gives access to the open liquidity market.

What type of HFT is the most popular and affordable for a simple trader

 

HFT algorithm is unique with each investment company or fund and is carefully kept secret . Wikipedia denotes 4 popular kinds of strategies, but for a simple user it more realistic and feasible to utilize the overall principle of this strategy, the arbitration.

Arbitration is a trading strategy which takes into account the difference in prices for the same asset due to the “time lag”. This type of trading can be divided into 2 sub types: FIX API Latency Arbitrage and FIX API 2-Legs Arbitrage. The difference of these types is that in the first one, the robot finds the difference for the same asset at two brokers and opens a transaction at a “slow” broker (Latency Arbitrage). Often this strategy is used with the help of locking open positions or by the principle of FIX API Lock Arbitrage. In the second type, a robot purchases the same asset at one broker and sells it at a second one (2-Legs Arbitrage). As HFT allows you to perform the operation in a matter of microseconds, in those moments when the price per share at one site is different from the other with a minimal latency, this is enough for a robot to make several transactions and fix profit. Besides, an HFT robot can analyze multiple marketplaces, find the difference in price for the same asset, and make transactions calculating price latencies on one exchange site. In addition to exchanges, the difference may be in the instrument itself as well as the derived asset. For example, the value of the share is $100, and a derivative for it is 100.01 $ (price is kept for about a second). During this time, the robot opens a transaction for sale of derivative asset. And this one cent will comprise the profit. But it’s for only 1 share. What if there’s a 100? Or a 1000? With hundreds of such deals per day? Of course, this will make a substantial yield for a company or a trader that has a trading robot.

Example of arbitrage performed by a robot

HFT allows traders to get rid of the constant analysis of market fluctuations and concentrate on the optimization and automation of its trading system. Because the Forex market is quite volatile, in order to use the HFT one needs a FIX API forex broker. This will increase profitability due to fast responsiveness of the robot, which is not possible for a human. Moreover, on the basis of HFT you can build multiple trading algorithms and thus reduce risks and diversify investment capital

How I started using forex robots.


Forex is a casino where people play and hope to win big. At least it is true for a normal ordinary trader who is happy to net extra few hundred dollars a month form his 3K investment account.

I started my forex carrier with a casino thing in mind, so very quickly I got hooked on winning no matter what. Hours and hours in front of a computer screen made my wife scream on the daily basis. But I knew better than listen to a woman. Soon fatigue, emotional pressure and absence of any other life kicked in and I lost my deposit. That is when I went back to ground zero and started real learning. First, I did a serious research on forex robots because I knew I needed two things – free time and less emotional approach to winning at all costs.

Choosing a forex robot proved to be a difficult job. There are lots of them – free and paid, built on different approaches and strategies, simple and complex. So, I learned my first forex lesson: invest into a quality software before you lost your deposit.

To choose a forex robot I started digging at the forex robot review sites. To be able to trade on a pro level you definitely need a forex robot which is a computer software program built on hundreds of algorithms to carry on trading according to set up parameters. Find a decent site that reviews forex robots and learn as much as you can.

  • Read the reviews to understand the performance of robots, check how this or that robot is doing with current clients.
  • Understand how much and how quickly a robot can be optimized, remember that the money market is constantly changing and you should adapt your robot to the current situation.
  • Monitor new robots coming out into the market and compare their performances. Developer companies who produce robots are trying to come up with more adaptable solutions and more complex systems to provide a trader with a successful tool.

I went the long way and after I had lost my first deposit I invested into the software. Bought several decent robots after extensive research and over a period of 18 months finally settled on the best robot. More about an automated trading here: https://en.wikipedia.org/wiki/Foreign_exchange_autotrading

How do you test a forex robot?

First, you will need to install a robot into an MT4 terminal and set up a number of bars in the history of quotes in the top menu SERVICE and a sub category Quotes Archive. In the new window choose Graphs and set maximum bars of history and maximum bars in window, enter 100 000 000 and press OK.

To choose a currency pair with a history of quotes hit F2, choose a pair with M1 timeframe and press Download. After download you will need to restart your terminal, press F2, choose the currency pair again and click on timeframe M1 until the grey icon becomes yellow. The same actions will have to be done for all timeframes of the currency pair. Then press CTRL +R and choose advisor. Choose a currency pair, time interval and the type of the test. Press START and watch for results.

So, I tested a lot with the demo accounts and then went back to trading with several different robots. At the end of the day I became a successful trader, so I learned my lesson number 2: preparation is the key to success. Spending for software and testing it is so much better than losing a deposit.