Successful forex traders often have humble beginnings and often trade on outdated hardware with screens of different brands and sizes. To the untrained eye, their workspace doesn’t differ much from that of a typical garage tech startup.
But beyond late-night jobs and instant noodle meals, some traders are breaking out on the path to becoming the equivalent of startup unicorns. Suddenly, they need access to the market around the clock, with backup, lightning-fast internet and reliable uptime. Fortunately, these days this solution comes in the form of a virtual private server (VPS) that covers all those needs and more.
This article will explain the VPS, how it works and why every successful forex trader should consider having one.
How does a Forex VPS work?
A virtual VPS is an emulated server that contains a trading terminal and keeps it permanently connected to brokers’ trading networks. It works as a software-as-a-service, where you pay a monthly subscription for access. VPS is not a dedicated server – which is a more expensive solution – but rather is a single server system that hosts several private servers.
For serious traders, a VPS provides a way to manage their automated or semi-automated forex trading systems 24 hours a day, 5 days a week. VPS is accessible from any smart device, thus providing a clear advantage for traders who want to monitor the markets without leaving their trading setup unattended.
How Latency Affects Forex Trading?
In forex trading, latency relates to the speed of delay between the user’s request and the server’s response. Latency is a measure of delay.
Institutional traders consider latency to be one of the highest priorities. Hedge funds therefore often rush to buy property near landing sites of undersea internet cables. At that level, a millisecond advantage can be the difference between making or losing money.
While insufficient network performance leads to communication delay, retail merchants face two other forms of latency. Poor server processing power leads to application latency. Meanwhile, memory lag occurs when trading software needs to access data in memory – dangerous for trading systems that track many currency pairs.
Benefits of using a Forex virtual private server
A VPS does not eliminate forex risks, but it represents the next step in trading for serious traders.
Digital malware is becoming more advanced every day. Using a VPS can mitigate certain security risks that arise from using a trading computer for other non-trading activities.
If you are trading an automated system, you need a technical solution that follows the market movements throughout the day. VPS is an affordable solution without the need to have a dedicated system.
VPS is accessible 24 hours a day, 7 days a week. You can access it from anywhere, through any smart device and keep track of your positions.
Driving errors can happen at any time. Keeping a copy of your trading system automatically creates a backup copy in case something goes wrong with your hardware.
Latency measures the response between your system and the server that executes your trades. Usually it depends on the physical distance between you and the broker’s server. You can improve latency by trading through a VPS closer to the broker’s server.
Slip is the difference between the price at the time of order execution and the price at which the order is filled. As VPS lowers the latency between the parties, it will improve slippage – resulting in fewer surprises due to price spikes far from the point of access.
No connection issues
Stable connectivity is a major requirement for trading. Still, connection drops at random times of the day can frustrate traders, especially if they occur at peak times in the market. A VPS offers stable uptime – an important feature for merchants who operate automated systems 24 hours a day.
What to consider when choosing a Forex VPS
Hosting trading systems on remote servers does not come in one-size-fits-all. Here is the list of specifications that you should keep in mind when choosing a forex VPS.
Although MetaTrader is the most popular forex trading software out there, there are other solutions such as cTrader or broker’s own solutions. Before choosing a VPS, make sure it can run the operating system using your selected trading platform.
Trading software can require hefty hardware resources. If you run an extensive system that trades many forex pairs, pay attention to hardware utilization, especially random access memory (RAM).
Data center location
Execution speed is one of the priorities, especially if your trading system operates intraday on a lower trading time frame. For this reason, you should look for a VPS hosted in a data center close to your broker’s server location. Reducing this distance will reduce latency and improve trade entries and results.
A VPS server is a cost that will eat into your trading profit. Before starting VPS trading, make sure your system is profitable on a large sample size that includes both forward and back testing.
Which VPS is best for Forex?
1. AccuWeb Hosting
A veteran company with nearly two decades in the business, AccuWeb Hosting offers dedicated solutions for forex traders. Using 17+ locations ensures that your system will offer as low latency as possible.
2. Forex VPS.net
A dedicated VPS provider, Forex VPS.net runs over a dozen servers worldwide, offering virtual private and dedicated solutions. The company works with forex brokers to guarantee the best performance and latency as low as 1 millisecond.
With over 2,000 reviews on Trustpilot, FXVM is undoubtedly one of the best options for forex VPS hosting. FXVM offers MetaTrader 4 & 5 autostart at an affordable price, and is a great way to test forex VPS trading at an affordable price.
Frequently Asked Questions
Do I need a VPS for MT4?
If you are trading anything other than short-term intraday scalping strategies, you should consider using a VPS for MT4.
Why do you need a VPS in forex trading?
VPS helps to solve many technical problems with forex trading, such as latency issues, 24/5 uptime or memory usage.
MetaTrader VPS is a virtual server that can be rented directly from the MetaTrader terminal. It is a built-in virtual hosting designed to provide minimum network latency in a user-friendly format at an affordable price.