Unfortunately, although many cryptocurrency exchanges have designed extremely simple tools for onboarding retail customers, the services they provide for enterprise and institutional customers is often lacking.
At XTRD, we design solutions for high volume cryptocurrency traders, helping those with advanced trading needs to access global crypto markets with improved security, reduced latency, and increased efficiency.
Here, we will take a run-through of the major challenges facing advanced traders today, while looking at how some of XTRD’s upcoming products can help banks, hedge funds, and large institutional traders improve their access to crypto markets.
Since the cryptocurrency markets are notoriously volatile, and substantial price movements can occur within just seconds, it is important to employ a solution that can minimize latency in order to quickly execute orders at the desired price.
By trading through an API, traders can minimize their security risks by limiting access permissions to exchanges, while also benefiting from improved order execution speeds — something much needed for high volume traders.
However, with each exchange having a unique API, integration costs can become burdensome, which leads many institutional traders to integrate with only a select few cryptocurrency exchange platforms.
With the advent of FIX APIs, these issues have become a thing of the past, giving institutional and professional traders a standardized way to communicate with any compatible exchange. This also has the benefit of providing complete privacy to FIX API users as channels are typically private and secure, ensuring sensitive data is never exposed to commercial platforms.
XTRD’s FIX API is one such product, providing one of the world’s first standard API which can be used for order execution at all crypto exchanges, giving major institutions, hedge funds, and algorithmic traders the opportunity to easily access liquidity across different exchanges.
By using the FIX API, trading institutions of all sizes can improve the liquidity of any cryptocurrency holdings, allowing much larger orders to be executed without risking price slippage. As a result, integration costs will be significantly lower, since traders will only need to integrate the single FIX API with their existing systems to enable API trading on all supported exchange platforms.
One of the major challenges faced by advanced traders is the inefficiency of the web interface provided by most exchange platforms. With clunky, slow, and often buggy tools slowing down the rate of order execution, and potential outages causing trading clients to miss potentially profitable opportunities, there is a great need for a robust standalone trading solution.
Thankfully, several companies have designed aggregator platforms to help institutional clients maximize their exposure to multiple exchanges without compromising on features. An example of this is the forthcoming XTRD PRO, a client-side interface that was designed to provide professional traders with robust access to crypto exchanges via XTRD’s FIX API serving as the back end.
By maintaining unfettered access to all major exchange platforms, traders will be able to capitalize on more opportunities than previously possible, all from a single streamlined user interface.
Within XTRD PRO, users will be able to manage trades from all of their cryptocurrency exchange accounts from a single downloadable application. By massively improving efficiency and fill rates, XTRD PRO users benefit from faster trades and greater profits.
A Final Word on Latency
Arguably, the major issue faced by high-frequency and algorithmic traders is the delay between order submission and order execution on the receiving platform — known as latency. If high enough, this latency can severely disrupt the profitability of a trade.
Not only does low latency lead to fewer failed trades, but it also ensures that traders benefit from the best rates, considering the volatility of crypto markets. Because of this, securing extremely low latency access to cryptocurrency exchanges should give high-speed traders a significant trading advantage, allowing them to execute trades based on momentary changes in market dynamics.
To address this concern, XTRD will soon begin offering colocation services, providing latency-dependent traders a VPS solution that cuts latency from an average of 150 milliseconds (1 second contains 1000 milliseconds), down to a potential 1.5 milliseconds. Combined with XTRD’s FIX API, this can yield a significant performance increase over handling cryptocurrency trading manually with connections over the internet, which are typically slow and not secure.