The Gateway to Markets
Exchange APIs are how your code talks to exchanges. They're the critical interface that turns your trading decisions into actual positions.
REST vs WebSocket
REST APIs: Request-response model. Used for placing orders, checking balances, querying positions. Limitations include rate limits and no real-time updates.
WebSocket APIs: Persistent connection where exchange pushes data to you. Used for price streams, order book updates, trade notifications.
Most trading systems use both: WebSocket for real-time data, REST for order operations.
Authentication
Exchanges require authentication for trading operations using API Key (public identifier) and API Secret (private key for signing). Most exchanges use HMAC-SHA256 signing.
Security Best Practices:
- •Never commit secrets to git
- •Use environment variables or secret managers
- •Create separate API keys for each system
- •Enable IP whitelisting where possible
Rate Limits
Every exchange limits how often you can call their API. Exceed limits and you get errors or temporary bans.
Build rate limit handling from the start: track your usage, implement backoff when approaching limits, queue requests to spread over time, and prioritize trading requests over data requests.
Order Types Deep Dive
Market Order: Fills immediately at current market price. Simple but no price guarantee.
Limit Order: Fills only at specified price or better. May not fill at all.
Stop-Loss Order: Triggers market order when stop price is hit.
Time-In-Force Options: GTC (Good Till Cancelled), IOC (Immediate or Cancel), FOK (Fill or Kill), GTX (Post Only).
Error Handling
API calls fail frequently. Handle network errors (timeout, connection refused), exchange errors (invalid signature, rate limited, insufficient balance), and always assume nothing - verify every operation.
The most dangerous state: order sent, no response received. Did it execute or not? You must verify.
Exchange Differences
Every exchange is different. Parameter names vary, position modes differ (one-way vs hedge), margin types vary (cross vs isolated). This is why libraries like CCXT exist - they normalize these differences.
WebSocket Best Practices
WebSockets will disconnect. Your code must detect disconnection immediately, attempt reconnection with backoff, resubscribe to channels, and request missed data if available.
Testing Without Real Money
Never test with real money first. Use exchange testnets (Binance, Bybit, OKX all offer them), paper trading against real data, and dry run mode that logs instead of sending orders.
CCXT: The Universal Adapter
CCXT provides a unified interface to 100+ exchanges, handling authentication, request signing, rate limiting, and response parsing. We recommend using CCXT as your base and adding direct API calls for features it doesn't support well.
Takeaway
Exchange APIs are the foundation of automated trading and the source of most production bugs. Master authentication, rate limits, error handling, and WebSocket management.