VPS is an attractive tool especially for EA or robot trading users. Here's a complete guide on how to use VPS for forex trading.

In forex trading, there are a couple of things required to manage trade, including a good trading strategy, as well as a strong internet connection, uptime, and forex trading software. Even those are sometimes not enough to make consistent profits. Therefore, as a forex trader, it's important to know the various tools and add-ons that you can use to improve your trade. One of the best options that you can use is a Virtual Private Server (VPS). 

Forex VPS

VPS is even considered necessary if you trade with Expert Advisors (EAs) or other automated forex trading software. Other than trading, VPS is also among the best choices for people who own a website or business.

The purpose of using a VPS is to support 24-hour trading with lower costs. When trading with EAs, you need to make sure that the software keeps running automatically and you also need to have a fast internet connection as long as your trade is still open. Thus, setting up a VPS for your forex trades can actually make a huge difference in terms of the market execution and outcome. Here's everything you need to know about Forex VPS and how it works.

 

What is Forex VPS?

Virtual Private Server (VPS) is a computer server that allows users to access it remotely from pretty much anywhere, including the comfort of your home. This means you can access the internet, install programs, and basically do anything you normally do on your personal computers. By doing this, you can feel as if you're using a high-performing computer, even though the computer you own has limited specifications.

With that being said, VPS can help traders to set up the expert advisor to a private server that will be running 24/7 without interruptions and completely independent from the trader's own computer. So by installing software on VPS, you can avoid some unnecessary issues such as internet disconnections, power outages, hardware malfunctions, and more. VPS hosting companies typically charge around $5 to $99 per month for their service, depending on the product's quality.

As a retail trader, it's vital for you to understand that VPS is different from shared hosting. Shared hosting is a method of virtualization where several users are hosted on the same server and are allocated the server provider's resources.

However, this virtualization does not separate the actual resources from one user to another. Hence, the activities of one user might affect your performance because you basically need to compete with other users to gain the resources and computing time.

In VPS, the system is able to share the physical resources on a physical server, but the execution is way smarter. Each user is given a portion of the resources without having to compete for it. The portion of the resource acts as a standalone server, only with smaller resources so it's much cheaper and affordable for retail traders.

 

Why Do We Need VPS in Forex Trading?

Latency is one of the most pressing issues in forex trading. Latency is the that occurs between the time of command and the computer's response. Too much latency can make a difference between a successful or failed trade because even a few seconds can result in a price shift. Not only that, latency can be the source of other problems such as slippage and re-quotes, even for just a small price shift. While a minute slippage of 0.5 might sound insignificant, but accumulate and it will add up to perhaps even thousands of dollars in a single year.

In short, latency is bad news for any forex trader. The higher the latency, the more risk that you need to bear. For this reason, every forex trader needs a secure, speedy, and reliable platform to perform their trade in order to lower the latency in the form of VPS.

 

How VPS Hosting Works

Essentially, VPS hosting uses a strong server that divides a single resource like bandwidth, disk space, and RAM into numerous smaller "virtual servers" that works like a home desktop. Since each virtual server runs separately from one another, the system can offer more benefits for the user.

Firstly, VPS is considered safer and more scalable to use because it uses a system that uploads the data into the cloud and has antivirus software to give more protection. Since it operates independently, it's easier for technicians to troubleshoot problems with the VPS, if there are any. Other than that, VPS is also able to provide higher uptime and greater reliability overall. Besides, users usually find it more convenient to use their own computers.

In order to understand how VPS hosting works in forex trading, take a look at the simple illustration below:

How VPS hosting works

Put simply, there are three entities involved in the process: the trader's PC, the VPS, and the MT4 server, which are all connected to the internet. Since the EAs are installed on the VPS, the orders sent to the MT4 server are 100% autonomous. This means, the actual trading is supported by the VPS, so it can run 24/7 without a problem. Traders can just sit back and relax while the VPS takes control of the EA's connection.

Keep in mind that traders would still need to access the VPS if they want to upload new EAs or make other adjustments, and manage their trading accounts from the forex brokers. Luckily, none of these actions require 24/7 uptime from the trader's PC or connection.

 

The Benefits of Using Forex VPS

To summarize the use of forex VPS, the following are the advantages that you can get:

  • You can connect to the VPS server from practically anywhere with only a network connection. This offers the flexibility to trade anytime and anywhere.
  • The EA can operate 24/7 even when your computer is switched off.
  • VPS offers a high level of security protection with the VPS being checked frequently to ensure that they are doing their jobs. The VPS provider might also add antivirus and other software to make sure that the system is safe and well-protected.
  • A VPS can execute your trades more quickly than your computer because it's usually faster in transmitting orders, reducing latency and slippage.

 

Key Factors in Selecting a Forex VPS

If you are planning to utilize VPS, finding a good server requires proper insight and must-have features. Here's a guide on choosing VPS best suited to your needs.

 

1. Performance

It's best to choose VPS that use advanced virtualization technology, which allows the VPS provider to compartmentalize and split their resources amongst several users at once. However, note that in some cases, users with extreme workloads could affect the performance of other compartments. This can result in higher latency and reduced speed. For that reason, make sure that the VPS provider is able to maintain the operation stability so this issue won't happen.

 

2. Location of the VPS server

Not many people notice this but it's important to ensure that the VPS provider that you choose is co-located with your broker's server. If the VPS is co-located with the broker's server, then the latency period can be reduced.

 

3. High Uptime

As mentioned earlier, one of the main purposes of VPS is to provide uptime so that the internet connection can stay on and stable at all times. This is why you should pick a VPS that can provide at least 99% uptime. The VPS should have great redundancy in the system, which allows the provider to quickly shift users to another compartment if there's downtime or unexpected issue in the initial compartment.

 

4. Accept a Wide Range of Apps

As a forex trader, it's common to change strategies and try using different software to trade. So if you use VPS for forex trading, you need to make sure that the VPS supports a wide range of forex software or apps and allows users to enhance the software if required.

 

Conclusion

In forex trading, expert advisors and trading robots are a fun way to earn money. By making the trade automatic, traders can make money with lower costs and higher speed. Simply enter a program or strategy into the robot and it will enter and exit the market automatically. A forex robot can eliminate emotions and will stick to the rules no matter what. The catch is that you have to keep the robot running probably 24/7 so that the trades can go smoothly. VPS is a great solution for this because it can guarantee a server that stays online at all times without interruptions.

For retail forex traders, VPS is the closest opportunity to balance the co-location setups of institutional traders. To maximize the use, choose a VPS server that is co-located with the forex broker's server. The only downside to VPS is that it isn't free to use. But even so, the cost is still relatively low and totally worth it for the service it provides. Alternatively, you can search for trustworthy forex brokers that offer free VPS