Every trader that reaches a significant level on the financial market, especially those who have turned Forex transactions into their permanent source of income, face the difficulties that are unnoticed by beginners. Among them, latency is one of the most crucial factors that may lead to considerable annual losses. Let us dive into the matter and find out more.
What is a VPS for Forex Trading?
A forex VPS (virtual private server) is like a permanent link that connects your trading terminal to the larger trading network.
Forex VPS hosting keeps you connected so you can keep trading, giving you safety and security in case the system goes down unexpectedly. It is a tool for automating trades, but it can also be seen as part of a trader’s plan for managing risk.
When you use MT4 at home on your computer, for example, you are connected to the standard trading network, which is where your trades are carried out. But what happens if your power goes out and you can’t connect to the internet? Or a bug in the system? Or your computer just stops working or freezes up?
You lose the ability to open, close, or change your trades right away, which can be a big deal in a market that moves quickly.
How does forex VPS work?
A forex VPS is just a desktop PC that is stored in the cloud.
A VPS can host a version of an OS that can be controlled remotely from pretty much any other device in the area. This is similar to servers that host websites, but it also has the ability to directly host your desktop computer and let it work as if it were on its own server (like renting out a room in someone’s house).
Even though several VPSs are made on the same computer, each one has its own set amount of CPU power and space, so you know you’ll always have what you signed up for each month.
The forex VPS works like a SaaS, in which you pay a monthly fee to a provider to use their VPS hosting service. Read on to learn about some of the best third-party VPS providers.
What Is Latency
The situation in the financial markets is constantly changing. There are so many factors that influence the fluctuation of prices. There is no surprise that a price can change in a matter of seconds or even less. If you already know this, you have already faced a problem called latency. In other words, this is a delay time between the moment you press the button Sell or Buy and the registration of this order on the server of a trading platform. Just a several-seconds delay and the price can change. Thus, a trader has to either cancel (to off-quote) an order or place another one at the rate that is rarely more profitable (this is called re-quote).
All in all, latency is not about an inconvenience or just a technical issue. This problem is quite serious as may lead to crucial losses in a year of activity on the financial market. However, there is a possibility to solve this problem. Utilization of VPS, virtual private server, is the response to the challenge imposed by latency. This is especially useful for automated trading.
Why should You use a forex VPS?
A Virtual Private Server (VPS) is good for automated trading because it keeps you connected to the internet and lets you do things faster.
VPS services are powerful, with CPU speeds that are up to 20% faster than comparable servers. This is because they have more RAM available to run processes in parallel while minimizing usage spikes from other clients on the same server.
A VPS provides Backups
Forex VPS servers back up your whole trading setup, including your operating system and trading software, all the time.
No matter what problems you might be having with your computer or other devices, a VPS acts as a kind of safety net to protect you from problems that can happen if an unexpected connection is lost. It means that you can keep trading and not miss any chances.
A VPS Improves latency and reduces slippage
In trading, latency basically means how quickly your trade is carried out. In other words, it’s the time between when you click “OK” to confirm a trade and when the marketplace gets your trade.
Latency in trading is measured in milliseconds, but in a market that moves so quickly, milliseconds can mean a lot. So, the better is the less latency. And a VPS connection gives you computer servers that are physically closer to exchanges, which is one way to reduce latency.
And if your connection is fast, you’re less likely to experience slippage, which is the difference between the actual price when you click the button to confirm the trade and when the trade is received and finished.
Even though the online world may seem fast, everything takes time. One of the best things about using a VPS is that it can be a low-cost way to improve your latency and give you more stable pricing.
A VPS is a safe, and effective tool for Trading.
A virtual private server (VPS) is a simple and inexpensive way to protect your system and lower your level of risk so you can focus on building a path to becoming a successful trader.
Choosing a Server for VPS Forex Trading
This matter demands in-depth analysis and research. A server has to maintain a permanent connection with a trading platform reducing the risk to be influenced by latency to a minimum. There are some major concerns that should be taken into account before deciding on a particular server to buy or rent:
- Safety & Reliability: This is not easy to understand this without experience. That is why one should look for feedback and comments on the Internet. Let the experience of other users, especially traders, help you decide.
- Compatibility with an OS: We are all used to a wide range of compatibility, though, choosing a VPS, one should pay attention to the operating system on a PC.
- Configurations, settings, and other technical features: What is the RAM space you require? Is there a backup protocol? How is data transferred? These are just a few questions to reply to before opting for a server.
- Special VPS for Forex trading vs. regular web hosting? To decide on this matter, it is important to estimate the pros and cons of both options, as well as find the experience of other users shared on the Internet.
- Pricing: Different providers offer different plans and terms to use a VPS. Thus, make sure that you will not overpay, as well as do not be too mean. A server is intended to save you from massive financial losses.
The more money a trader starts earning, the more difficulties can be experienced. Making use of contemporary solutions like trading with a VPS will help overcome the challenges and play high.
Brokers which provide free VPS Trading
Alexandra is a professional writer with an extensive background in the financial markets. Alexandra started out in the financial industry in 2011 and trades forex, stocks, and cryptocurrencies.
Alexandra also writes technical and fundamental market analyses. Alexandra also tests forex brokers’ trading platforms and crypto exchanges and writes forex broker reviews.