Trading APIs, FIX and WebSocketsAPI
An API (application programming interface) lets software place orders and receive data from a broker or exchange. FIX is the long-standing industry protocol for electronic trading messages; WebSocket feeds stream live prices over a persistent connection. APIs usually have rate limits on how many requests you can send.
Most trading today runs through software. APIs let programs send orders and read data, FIX is the industry's standard message language, and WebSockets stream live prices. Each comes with limits and risks that a trader using code needs to understand.
- Category
- Trading Strategies
- Reading time
- 4 min
- Also called
- Trading API, FIX protocol, WebSocket feed
- Updated
Trading technology in plain words
Automated systems that accidentally swamp an exchange's matching engine with messages are one known cause of disruption in electronic markets.1
FIX is a global open standard that lets financial firms exchange trading information quickly, accurately and securely.2
WebSocket is a protocol for two-way communication between a client, such as a browser page, and a remote server that has agreed to talk to it.3
How software trades through an API
Get API keys
Create keys with the broker and limit their permissions.
Connect to data
Use a WebSocket instead of repeatedly polling over HTTP when you need a live two-way connection.3
Send orders
Place a Limit Order or Market Order through the order endpoint or a FIX session.
Respect rate limits
Respect rate limits — on Kraken, once an API key's call counter passes its maximum, further calls are throttled.4
Add controls
Add controls such as pre-trade caps on order size, price bands around the market, message throttles and daily price limits.1
Check local rules
Rules for automated and API trading differ by country and by venue.
Worked examples
Example 1 — Streaming prices
Faster dataA hypothetical bot uses a WebSocket feed instead of asking for prices every second.
| Requests saved | Most |
| Fills | On time |
A WebSocket provides an alternative to HTTP polling, so the bot reacts sooner with fewer calls.3
Example 2 — Rate limited
BlockedA hypothetical script sends too many requests and is blocked mid-trade.
| Calls | Far above limit |
| Missed exit | −1.5R |
Hitting the rate limit blocks further calls for a few seconds — longer if calls keep coming — so the exit order never went through.4
Example 3 — Shared language
Quick linkA hypothetical fund links to a new broker over FIX in days rather than months.
| Custom code | Little |
| Setup time | Short |
FIX acts as a shared language, so banks, asset managers, exchanges and vendors can connect without building a custom link for every counterparty.2
REST API vs WebSocket vs FIX
| Aspect | REST API | WebSocket / FIX |
|---|---|---|
| Connection | One request at a time | Persistent session |
| Best for | Orders and account data | Live prices and fast order flow |
| Users | Retail and pros | Mostly pros for FIX |
| Main limit | Rate limits | Session and throttle limits |
Where trading technology is used
Bots
Running a rule-based Trading Strategy.
Live data
Streaming the Order Book and prices.
Institutional trading
Sending orders to a Broker over FIX.
Risk tools
Automating Stop Loss and limits.
Advantages and disadvantages
Advantages
- Faster and more consistent than clicking.
- Live data without constant polling.
- FIX avoids custom links per firm.
- Enables automated risk controls.
Disadvantages
- Coding errors can be costly.
- Rate limits can block orders.
- Connections can drop.
- Keys must be kept secure.
Going deeper
Read as far as you need. Each level builds on the one before it.
What FIX is
Beginner
FIX is an open, global messaging standard built for fast, accurate and secure exchange of trading data between institutions.2
Streaming
Intermediate
A WebSocket keeps one connection open in both directions between a client and a server that has agreed to it, which suits streaming prices.3
Risk controls
Advanced
Typical exchange controls include order-size caps, price collars, message throttles and daily price limits; the rules differ by country.1
Common mistakes
Ignoring rate limits
Blocked calls can stop exits.
Giving keys withdrawal rights
Limit permissions to trading.
No reconnect logic
Dropped feeds mean stale prices.
Testing live first
Use a demo or sandbox.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- APIs let software trade and read data.
- FIX is the industry message standard.
- WebSockets stream live data.
- Rate limits can block calls.
- Rules differ by country.
Frequently asked questions
Do I need FIX as a retail trader?
Are API keys risky?
Why was my bot blocked?
Further learning
- Order Book
Data many feeds stream.
- Limit Order
A common API order.
- Slippage
A cost of slow systems.
- Broker
Who provides the API.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- CFTC. Electronic Trading Risk Principles (Final Rule, 85 FR 2020-27622) (opens in a new tab) Checked .
- FIX Trading Community. The FIX Protocol (opens in a new tab) Checked .
- IETF. RFC 6455: The WebSocket Protocol (opens in a new tab) Checked .
- Kraken. Spot REST Rate Limits (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.