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What is a VPS and why do traders need them?

Written by Dominic Gilbert. Published on November 4th, 2016.


In Forex the demographic of market participants vary from retail, institutional, business, inter-bank dealers, market makers, banks etc. and all have different motives for why they engage in spot FX in the first place. It could be to make money from offering a market (brokers / inter-bank dealers) or hedging their exchange rate risk if it’s a business that has international affairs.

With that said, retail market participants are in this business to speculate with their money in an attempt to make more. As time goes by, more and more retail market participants are engaging with algorithmic trading (either out sourced or coded themselves) or FX copying technology. Acknowledging this will also allow you to understand about additional avenues to explore when you consider the best ways and more relevantly speaking, environments to do this in. Before i go head first into explaining exactly what I mean by this, try to visualise where you are in the world and where – when you send a trade – your broker is located. This information that you’re sending (your trade) can be sent to a location that is literally thousands of miles away from where you are. This can take time and time is a sensitive variable in speculative trading…

internet-neutrality

Is this really a problem?

Think about price on the market you’re trying to trade. If you’re trading a strategy that is looking for short-term price fluctuations then you’re exposing yourself to technological latency issues. What I mean by this is; you want price “x” but by the time your broker gets your order, you get filled at price “y”. This is a very subtle cost that can build up over time and in most cases, actually makes a profitable strategy a losing one. This maybe hard to believe, but it’s true. What makes this worse is that you face this same issue when you close the trade. This is all because there is a delay from when you want to buy or sell, and when your buy and sell hits the market.

So how does one person reduce this subtle but very important issue? Move your computer right next to the brokers server…

New Neighbours…

VPS stands for: “virtual private servers” and if you’re not down with the know, this may appear as something complicated to wrap your head around but it’s not. A virtual private server is essentially a computer you use that is inside a bigger computer… Ok you’re probably not that slow; in essence it is a computer (virtual one that uses Windows, like your desktop) that resides in what is known as a dedicated server – like the ones below:

ss-5

Hopefully you’ve seen a picture like this before, if not it’s what is known as a “Data Centre” and this is where brokers (small and big) hang out. What we’re doing is allowing you to rent a spot right next to their location (or inside the same data centre) which mean you can send a trade to your broker in as fast as 1 millisecond… To put that speed into perspective the human eye on average blinks in around 300-400 milliseconds…

Around The Clock and Guaranteed

Great, so you can send a trade quicker, but is that all there is to it?

Ever felt paranoid about your expert advisor (EA) stop working or to come back to your home PC and find that you’ve lost connection or your PC has crashed? Virtual Private Server providers give you 24/7 around the clock high bandwidth internet connections. In addition to this, they’re hosted on insanely powerful dedicated servers so if you have some EA that requires some beefy CPU horse-power, they’ll be able to do the heavy lifting for you.

Hopefully you can see now that not only does it get your trades filled insanely fast, but it gives you the utmost peace of mind that you’re always online and trading.

Getting started and access to your Virtual Private Server couldn’t be easier. You can learn more about Forex specialist VPS providers below (our sister companies) and also lean on our support team to guide you through any questions you’re not sure on:

ForexVPS – Powerful VPS: www.forexvps.net

FXVM – as low as $19.95: www.fxvm.net 


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