An API (Application Programming Interface) is a defined channel that lets one piece of software communicate with another, following a structured set of rules. In trading, a broker’s API is what allows external software — including webhook-triggered systems — to place orders or retrieve account data programmatically, only after the account holder authorizes it.
Related Reading
See how APIs and webhooks work together in the broader automation picture in What Is a Webhook? Explained for Non-Programmers.