How to use API for automated trading?

In order to use third-party software for manual trading, you need to connect it to an exchange using an API. Automated trading also falls into this category, so anyone who wants to use it should know how to use the API to connect.

What an API is and why traders need one

An API is an application programming interface that allows programs to communicate with each other. In the context of trading, an api in simple words is a bridge between a trading bot and an exchange through which the bot can execute commands: get prices, open and close trades, and check the balance.

For traders, the API of crypto exchanges is the most important tool for automating trading. It can be used to connect third-party services such as trading bots, analytical systems or even your own script for cryptocurrency trading via code. This greatly speeds up the process and makes it possible to trade 24/7 without manual intervention.

How automated trading via API works

Automatic trading via API is based on the transmission of commands between a trading bot and a cryptocurrency exchange through a special interface - the API of cryptocurrency exchanges. This interface allows you to programmatically manage your account on the exchange: receive quotes, open and close transactions, check the state of the balance and orders. The point is that a trader no longer needs to manually log in to the exchange, because all actions are performed by a bot in automatic mode, based on set rules.

The key components in this process are API keys. These are digital identifiers that are provided by the exchange after user authorization. With the help of these keys, the bot gains access to your account within the set permissions. For example, if read-only access is enabled, it will be able to view the balance and quotes, but will not be able to trade. And with full access, it can work with orders, withdraw funds and other things.

API operations are divided into two types: via REST API, which is used for point requests (for example, to get the price of an asset or create an order), and WebSocket, through which the bot receives real-time data, such as price and volume changes. WebSocket enables high-frequency trading and instant response to market changes, which is critical for scalping or arbitrage.

All the signals the bot acts on are pre-programmed. It can track the achievement of a certain price, analyze indicators and volumes, or simply work according to a template strategy. As soon as the required conditions are met, the bot sends a request via API and the exchange executes the command. This allows you to build complex logics of behavior without the constant participation of a trader.

Where to start: step by step

The first step is to create an account on the chosen crypto exchange that supports working with API. Most of the major platforms - Binance, Bybit, OKX, HTX, Gate. io and BingX have corresponding sections in the profile settings. There you will be able to create an API key and a secret token, which will be used to authorize your program.

Next, it's important to understand how to connect the API to your system or trading bot. The Veles Finance platform offers a user-friendly interface, all you have to do is insert the key and select an exchange from the list. After that, the connection is established and the bot gets access to your account within the set rights.

At this stage, you should definitely limit the risks: disable the possibility of withdrawing funds, enable IP filtering and use proxies if necessary. This will minimize the probability of hacking. Keep your keys in a secure storage and do not share them with third parties.

Once connected, you can start configuring the bot. You set trading parameters: what assets to work with, under what conditions to enter the market, when to fix profit or exit by stop-loss. The bot will realize all this automatically, without your intervention, using data received through crypto API.

Examples of API usage

There are many ways to apply the API for crypto bot in real trading. One of the most common scenarios is to build a technical analysis algorithm that monitors indicators, such as RSI or moving averages, and opens positions when specified conditions match. This is convenient for implementing swing trading or trend trading strategies.

Another option is arbitrage. The bot receives data about prices on several exchanges and automatically makes transactions if it detects a difference in the value of the same asset. In this case, the speed of receiving data is important, and here it is better to use WebSocket for instant response.

You can also use the API to create a simple DCA strategy where the bot periodically buys cryptocurrency for a given amount. This is convenient for long-term investors who don't want to follow the market every day. In addition, there are cases when the API is used not for trading, but for balance monitoring and portfolio analysis, for example, when maintaining reports or integrating with tax systems.

Safety when working with API

It's important to not only understand the technical part of the API device, but also how to use them safely for yourself.

How to store keys

API keys are digital passes that give your app or trading bot access to your exchange account via API. Leaking them is tantamount to handing over full control of your funds. That's why Security of API keys is the first priority when automating trading.

Keys should be stored encrypted and only in a local environment or secure storage. The best solution is to use system environment variables or tools like HashiCorp Vault and AWS Secrets Manager. If you work with code, try to never include keys directly in scripts, especially when using version control systems. Encrypted configuration files and password managers with two-factor authentication also greatly reduce the risk of unauthorized access.

Which permissions to disable

Many crypto APIs offer flexible permission settings. This allows you to minimize the risks if the key does end up in the wrong hands. First and foremost, always disable withdrawal permissions. No trading bot, be it Veles or any other, needs direct access to withdrawals - the permissions to view balance and open/close orders are sufficient for trading.

If the bot only works with spot, there is no need to give it access to futures. If you use the API only for analytics, then disable trading operations altogether. Such segmentation of access is one of the basic methods of protection when using APIs of cryptocurrency exchanges.

Use of proxies and IP restrictions

IP restriction is one of the most effective measures to protect API keys. Most exchanges allow you to set a list of trusted IP addresses from which API access is allowed. This means that even if someone gets your key, they can't use it without being within the authorized IP range.

Using a VPN or proxy helps ensure stable and controlled access from a single IP address, especially if the bot is running on a server. This approach not only protects against external interference, but also allows you to track any suspicious connection attempts. In addition, regular monitoring of API activity logs is a good practice for those who are serious about automated API trading and use cryptocurrency trading via code.

Following these principles helps reduce vulnerabilities and makes using a REST API or WebSocket as secure as possible, even in a highly volatile and hacker-driven crypto environment.

How APIs are implemented in Veles Finance

The Veles platform offers convenient integration with all top exchanges via APIs. The user can quickly connect the API to the exchange - just insert the keys and follow the step-by-step instructions. Once connected, the system automatically starts to receive data, conduct transactions and take into account all limit restrictions.

How the Veles bot works via API - it accesses the exchange for up-to-date data, calculates entry and exit parameters and opens orders according to the algorithm set by the user. Advanced security settings and access control are also available.

The advantage of Veles is that the whole process of connection and customization is maximally simplified, and even a trader without programming experience will be able to use the API of crypto exchanges in his strategy. Thus, even a beginner can easily start automated trading via API using one of the most stable and flexible platforms of 2025.