The FIX API, a widely utilized messaging protocol within the electronic trading sector, transcends the realm of forex trading.
Its application extends across various financial markets including stocks, metals, futures, and options exchanges. From Tier-1 banks to retail forex brokers, and even individual retail traders, the FIX API finds ubiquitous adoption.
What is the FIX Protocol?
What exactly is the FIX Protocol? Originating in 1992, FIX stands for The Financial Information eXchange (FIX) initiative. This protocol represents an open messaging standard devoid of singular ownership or control, allowing for customization to suit the unique needs of each employing entity.
To facilitate communication via the FIX protocol, clients and brokers utilize specialized software known as FIX engines. The initiation of a FIX session involves Client A and Broker B connecting their engines at a predefined start time, utilizing designated hosts and comp IDs.
History of FIX API
FIX is an abbreviation for Financial Information eXchange, while API, a term prevalent in IT, denotes Application Programming Interface.
The FIX API represents a non-proprietary, cost-free, and open protocol under the ownership of FIX Protocol Ltd., a UK-based nonprofit organization.
Initially conceived to facilitate equities trading and supplant telephone-based trading practices in the early 1990s, this protocol has undergone substantial evolution. Presently, it serves as a cornerstone technology utilized by numerous electronic trading entities globally.
Various iterations of the FIX messaging protocol exist today, with version 4.4 standing out as the most prevalent among them.
What are the Advantages of FIX API
The primary advantage of FIX API lies in its cost-free nature, perpetuated by the commitment of the FIX community to maintain the protocol’s accessibility indefinitely. Additionally, other key benefits are outlined below:
- Conformance: The FIX protocol offers extensive coverage across a spectrum of securities. Notably, not all FIX users leverage the entirety of available messages. Typically, brokers or exchanges establish guidelines for message utilization, ensuring adherence to specific engagement protocols.
- Speed: FIX messages are engineered to be lightweight, enabling swift transmission with minimal bandwidth requirements. This attribute is particularly advantageous given the high frequency at which FIX messages are typically transmitted.
- Support for Multiple Brokers: FIX facilitates the establishment of concurrent sessions with multiple brokers, enabling traders to monitor trading conditions such as spreads and liquidity across a broader spectrum, thereby identifying opportunities more effectively.
- Convenience: Developers of trading systems benefit from the flexibility of utilizing virtually any programming language supporting socket communication for implementing FIX. This versatility enhances convenience and adaptability in system development processes.
What are the Limitations of FIX API
The FIX API establishes a rigid and unexpandable set of transaction types mandated for adherence by system developers, focusing primarily on two main exchange categories:
- Real-Time Market Data
- Order Execution & Management
Notably, FIX prohibits traders from querying specific details related to their trading accounts, such as Equity, Balance, Available Margin, Open/Closed Orders, and similar parameters. Furthermore, access to historical market data is not supported, with FIX exclusively facilitating real-time data acquisition.
Access to FIX API for Retail Traders
While the technology itself is technically available without cost, access to trade via FIX API is not universally granted by all forex brokers. Typically, brokers incur administrative costs associated with providing access, necessitating certain prerequisites.
For instance, some brokers may impose minimum deposit requirements or minimum monthly trading volume criteria as part of the access conditions.
How Does FIX API Work
In forex trading, transactions are typically executed through a platform provided by the broker, such as MetaTrader 4, MetaTrader 5, or cTrader.
Contrastingly, when utilizing FIX API for trading, there is no pre-existing platform available. Traders are required to develop their own platform, interface, or algorithm to transmit instructions to and receive information from the FIX API.
The complexity of the application created can vary according to individual preferences, ranging from simplistic to highly intricate designs.
Numerous FIX engines are presently available, significantly streamlining the development process for engineers by minimizing the time spent on transfer logic. This allows developers to concentrate more on application and trading logic.
An exemplary illustration of a mature and widely used open-source software library is QuickFIX.
Below is an illustration of what a logon message in FIX API resembles:
8=FIX.344.4|9=126|35=A|34=1|49=theBroker.12345|57=TRADE|50=any_string|52=0|553=12345|554=passw0rd!|10=131|20170117-08:03:04|56=CSERVER|98=0|108=3
References:
FIX Standards • FIX Trading Community