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Forex Trading with a VPS

Why use a forex VPS to run trading software?

by Eno Eteng

VPS stands for “virtual private server”. A VPS is simply a remotely located computer which allows the users to run programs and other computing functions on another computing device located on another server, while still connected to the parent computer. VPS applications are therefore available to run several programs, but our concern is usage of the VPS to run forex programs.

A VPS for forex trading can therefore be defined as a remote computer which permits the user to run trading software (such as expert advisors or EAs) on a continuous basis. The essence of using a forex VPS is to do the following:

  • Execute trades in the forex market with low latency of trade execution.
  • Ensure continuous operation of the forex trading software with minimal interruption.
  • Trade multiple accounts from one seamless application.

 

VPS and Latency

Latency in this sense refers to the time it takes for data to transit from the trader’s station to the broker’s server and back to the trading station. Obviously in this context, it is far more desirable for trade data to perform the round trip much faster. Data transmitted between the trading station and the trader includes trade orders, price feeds and news feeds.

  • Faster news feeds means that the trader can get market-moving information and be able to react to the market faster.
  • Price feeds are received by the trader on the charts. If price feeds are delayed, the trader will not be up to date on the current price of a currency pair. Trade decisions made on obsolete prices will end up in losses.
  • The speed of trade orders in today’s market is extremely important. This is what is exploited by high frequency trading algorithms. Companies invest a lot of money and resources to ensure that they get the fastest trade executions. A retail trader may not be able to lay a fibreoptic cable from his location to the trader’s servers, but access to a VPS for forex trading can bypass this restriction.

So it is possible for a trader in Indonesia, who has a latency of between 400-500ms between his trading station and his broker without the use of a VPS, to achieve a much lower latency of between 1-3ms when using a good forex VPS.

VPS and Continuous Function

There is a tendency for traders in the Western world take some of the things that they have easy access to for granted. Take for instance, something as basic as fast, broadband internet. Sadly, traders in many developing countries do not have access to fast internet and this makes trading a very difficult process for them. For these traders, a percentage of their losses can be directly attributed to poor internet connection. Poor network connection freezes platforms, makes trade executions slower and delays price and news feeds. For traders in this predicament, a forex VPS can be a lifesaver. Hosting EAs on a remote computer will greatly ameliorate this problem.

Forex VPS and Multiple Account Management

One advantage of using a forex VPS is that it allows you to run multiple instances of a forex platform such as the MT4 on a single forex VPS. This allows for seamless execution of trade orders from your local computer to the various trade accounts hosted on a VPS. There is a precaution that must be adopted by the trader when doing this. First, the forex VPS used must be one which can support multiple accounts, and the servers must be run on virtualization technology which allows for insulation from the activities of any other overloaded servers on the same provider.

Getting Access to the Forex VPS

Forex VPS packages are available for commercial purchase. You can also subscribe to your broker’s VPS. There are advantages and disadvantages to both.

  • If you use your broker’s forex VPS, then you will mostly likely get it for free or at a very reduced cost. An advantage is that you won’t need to go through complex integrations to get your account working on it. The snag here is that if the VPS is a crappy one, then you are stuck with it and will probably have to pass through the stress of setting up your account on an external VPS.
  • If you use an external forex VPS, then you have the liberty of choosing a forex VPS which works for you. The snag is that you may have to pay more for it, and you also have to pass through the rigor of setting it up properly.

*This post was published according to the "Contributed Article Terms and Conditions"

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