Forex Data API: Things You Didn’t Know

01/03/2023 at 07:43AM

Forex API helps establish a connection with the data vendors’ servers to access live and historical forex market data. Is this the only benefit forex data APIs provide? If you are new to forex trading, you may not be aware of numerous other things foreign exchange rates APIs help achieve. 

This article takes you through some actualities and unknown uses of currency data APIs that people new to forex trading may not be aware of. Keep reading to reveal interesting facts about the origin of forex data and some uncommon uses. 

Forex API Origin: Interesting Facts

It is fascinating to know the source of forex data and why the rates obtained from reliable forex rates API differ from retail rates. Let’s uncover some more surprising facts:

1) The Source of Forex Data

In the forex market, currencies are traded over the counter through banks, trading and brokerage firms without any centralised exchange. Market makers determine the bid and ask prices of currencies. They provide liquidity to the market by buying and selling at these quoted prices. 

The source of forex data are these ‘quoted’ bid and ask rates. However, those are the prices offered and not necessarily at which the currencies were traded. Thus, the foreign exchange API rates are ‘quoted’ and not necessarily the ‘traded’ rates.

Also Read: Where Does Forex Data Come From?

2) Different from Retail Rates

Reputed forex data vendors source forex data from recognised banks, institutions, and broker-dealer networks. They aggregate the data and provide it in real-time to their users. API for currency exchange offered by such recognised vendors are more accurate and reliable.

Rates that reflect on money exchanges for travellers differ from bank rates and interbank markets. Retail money exchange rates may reflect high skew, and thus they are not suited for applications.

3) Latency

Most importantly, currency exchange rates fluctuate at a higher frequency. Forex data takes 5-30 milliseconds to reach users from when it is quoted. Notably, latency may vary. Some data providers may quote rates as slowly as once an hour. So, not all foreign exchange APIs are created equal.

Lower latency ensures faster updates in currency prices and the best forex API. Eventually, that impacts your market analysis and trading decisions. 

API Forex: Commonly Unknown Uses

As discussed earlier, usually, traders and analysers use free market data API to access live and historical foreign exchange rates of various currency pairs. However, that’s not all. Let us see how FX API is used for other purposes:

4) Internet of Things (IoT) Transforms The Way Data is Consumed

IoT is used to connect ‘things’ for AI analytics and optimising various processes. Devices connected through IoT collect sensor data and share it through the IoT gateway or another edge device to the cloud for analysis, or the data may be analysed locally. Forex data may be consumed by your appliances, such as a car, TV, and fridge..

5) What Node Operators Do

Node operators access forex rates through the foreign exchange rates API and provide the information to their clients to execute Digital Smart Contracts. These on-chain Smart Contracts are implemented when certain conditions are met. However, they need off-chain, real-world information for execution. Forex, CFD, and Crypto Data API play a crucial role in this scenario. 

Also Read: What is a Blockchain Oracle and How To Become One?

6) Market Makers in Forex

Market Makers are major players that make their own quote-driven systems. They determine the bid-ask prices and display them on their systems publicly. They make transactions with their clients at these displayed prices. 

Most importantly, the quote-driven system is based on the data and eliminates the need for a trading API to transact. Usually, the price movements in such markets will be less volatile compared to electronic communications networks (ECN). 

7) Non-Custodial Trading & Wallets

Forex Data API can be used in non-custodial trading or wallets. In these markets, the traders will have complete control of their funds. They can transact through their wallets. Popular wallet provider companies like TDXP and cwallet get market data from us.

Conclusion

The article throws light on some less-known aspects of API for forex. We hope that you find the details useful. Choose Tradermade as your market data partner to get reliable and accurate live and historical forex data through REST API, WebSocket, and FIX, as per your technology needs. 

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