API keys and why do you need them

In today’s growing and constantly developing market, companies offer increasing amounts of software and services that help cryptocurrency users get the most out of their trades. To use these services, you will find yourself granting a third-party program/software certain technical permissions through an API key.

So… What is API key? Why do we need it?

What “exactly” an API key is determined by the person who issues it, and what services it’s being used for.

Most of the time, the main interaction with the API (application programming interface) will be through API keys, which allow other apps to access your account without you giving out your password.

An API key is an application programming interface key primarily used to identify the calling program, its developer, or its user (to identify the origin of the request).
picture by https://docs.apigee.com/

Typically, if you can identify the source of a request positively, it goes as a type of confirmation, which can lead to access control. It is utilized to track and control how the API is being utilized.

You need two separate keys, one that tells them who you are, and the other one that proves you are who you say you are.

Image result for public api key and secret api key

The API key consists of two different parts — Public and Private (AKA Secret).

Public API Key

The Public API Key is one that you can distribute to others, to allow them to get some subset of information about you from the API. It is similar to a username that players use to login into a game or a social network profile details. It is safe to expose your Public API Key, as this key cannot be used to access your account or private data.

Private API Key

On the other side, the Private API Key would then be similar to the password. This type of keys should be stored safely at all cost and only be used with the trusted developer (for the reference read Binance Hack Linked To Viacoin Pump)

How to Use an API Key for Crypto Trading

There are a lot of third party developers which provide very useful services when it comes to Risk Managment, Trading Analysis Report, Trading Tools, Automatic Trading, and Portfolio Rebalancing.

Trading Analysis Report

CoinTracking Live Demo Dashboard

With your API keys, programs and services like https://cointracking.info/ make your life easier in relation to rich finance, tax, accounting, and strategic planning crypto dashboard. These services are an excellent tool to determine the profits and losses from cryptocurrency trades and to prepare them for tax purposes.

Trading Tools

During your trading career, you might have faced some people using smart and useful tools for trading, which are different from the native exchange interface or trading terminals but use the account from this exchange/terminal.

Those tools/terminals are third-party applications that require access to exchange APIs for pricing data and your API keys for the ability to place orders.

The interface of HyperQuant Virtual Order Placement System

A good example is HyperQuant Virtual Order Placement System (VOPS). It allows exchange users to create an array of trade scenarios and constantly mitigates risk on open positions and also manages auto-stops. You can use this software to place stop-loss orders on the Kucoin Exchange.

Automatic Trading

Unlike the stock markets, the cryptocurrency market never closes and never sleeps, which can be highly stressful for casual investors and crypto traders. Trading bots have become an increasingly popular solution to the volatile crypto market. They never sleep and never get tired, they are computer programs that use various indicators to recognize trends and automatically execute trades, all you need to do is to add your API Keys / Coins Pairs / Strategies and run the bot!

Risk Management

You could be the most talented trader in the world and still blow your account with one bad call without proper risk management. It doesn't matter how experienced you are, you’re still going to witness loses, but how much you are going to lose strictly depends on the proper risk managment.

Read more about Risk Managment here

With your API keys, Risk managment engine/terminal could gradually reduce risk by:

  • Defining the size and frequency of your orders;
  • Setting stop-loss/take-profit levels and reminders;
  • Automatically closing all open positions in case of facing a maximum possible deposit drawback.

And many others useful functions! Soon you will hear more about it in future HyperQuant development reports.

Portfolio Rebalancing

Image result for Portfolio Rebalancing
Picture by Hackernoon

This useful tool mostly builds on a flexible mathematical model. It allows crypto invertors to construct and rebalance of an investment portfolio based on the wide range of objects and your personal preferences with a matter of seconds.

Regular rebalancing helps to maximize the ROI of your crypto portfolio by locking in profits when any of your assets gain in price and buying the dip when any of your assets drop in price.

Of course, you can do it by hands but it will take ages if you, let's say, want to build a portfolio using 100 coins/tokens and 30 alts OR you can do it automatically using your API keys and one trusted software developer. The choice is obvious here!

Expect more interesting information in future HyperQuant development reports.

Where to get your personal API keys

GAEA Exchange

  1. After you log into the exchange, click on your email located on the top right of the screen.
  2. Then find “Create API” in the Security setting area and click “Open”
  3. After that Choose the key permission you want to have (read/order canceling order placing/timeout order canceling)
  4. and click Create API key button

Coinbase pro

  • The instruction is here

Kucoin

The instruction is here.

Bilaxy

To get API keys please follow this link

Binance

Follow the instruction here


Since each software will have varying access to your funds due to different permissions you give them, it’s essential to choose software you give your API key very carefully.

ADVICE TIME!
To avoid any unpleasant situation, kindly ask you to write your key down and store it in a safe place, and in no case disclose it to anyone. Besides, keep in mind, that you are free to change your account and refresh/even delete a key through your exchange — therefore if you suppose that you key is used by any other untrustworthy part, take actions immediately.