Most manual traders are able to trade Forex from their desktop or even mobile. But when it comes to automated trading using Forex Trading Robots or MT4 Expert Advisors (EAs), running on personal home computer may not be in your best interest.
Unlike manual trading, Forex Robots can trade at any time of the day during market open hours (24 x 5). Internet connectivity issues, power outages or other disturbances are likely to happen since most home setups are not equipped to provide 100% up-time for computers and internet. Typically traders not using VPS for running EAs report more trading differences and under-performance. Power or internet outages even for small duration can potentially affect trade entry or exit by not being online at the time the signal was generated.
What is a VPS?
Virtual Private Server (VPS) is a virtual machine that can be used as a private server even though it is installed on a shared physical computer running several operating systems. The physical system may be used by several individual users each enjoying the same functionality and privacy as that of a normal physical computer.
The Virtual Private Server enables the user to install and run software as per their requirement, access and monitor server using Remote Desktop or other such tools from their personal computer.
To be profitable with automated trading, it is important to provide the trading software with the best possible conditions like broker with good execution, low spreads and minimal slippage. Similarly, the trading platform should be run on a reliable system with 100% up-time. Getting a good VPS is highly recommended when you are :
- Trading with an expert advisor (Forex Robot).
- VPS will also be useful when you have multiple trading accounts with more than one FX broker and you trade from different places (for example, home or office or when travelling). With the MT4’s running on a VPS, you will be able to access all the terminals at anytime, from anywhere.
- The cost of VPS will be compensated with the profit from automated trading.
- VPS reduces latency between your trading platform and the broker. By choosing VPS location close to the broker’s servers, latency can be reduced to as low as 10 ms or even lower.
While several different VPS options are available, most are used for shared web hosting and may run Linus servers. They are typically much lower in cost but may not be suitable for Forex Trading. It is highly recommended to use Windows VPS optimized for Forex trading. Click Here for the recommendation of the best ten Forex VPS providers.
VPS guarantees 100% up-time
Since VPS systems are hosted on high capacity systems, the service providers ensure sufficient power backup is available in case of outages, physical system failures, internet outages and many other issues. Most good VPS providers offer up-time of 99.99% and those specializing in providing Forex VPS ensure there are any system updates/maintenance are never scheduled during market open hours.
VPS Minimizes Latency
Your trading platform (for example MT4) interacts with the broker for every order placed, modified or closed. Latency is the time taken for your trading platform’s command to reach the broker server and get the response.
Home computers depending on your location may have latency between 50 ms to 500 ms. For example, you may live in Malaysia and the broker’s server may be in USA – the latency would typically be about 300 ms depending on the internet speed at your end and the other factors. A trader in US trading on the same broker may have a latency of just 50 ms. As a retail trader you are trading against institutional traders and banks which have practically instant execution times and provide ideal trading conditions of less than 1 ms latency.
You can choose VPS closes to your Forex Broker to minimize latency to less than 20 ms. Click here to read more about how latency can affect automated Forex trading results in the long run.
VPS can be scaled as per your requirements
VPS can be configured depending on your trading requirement. Minimal configuration can be rented at very low cost if you plan to run just one or two EAs on a MT4 platform. You can scale up the configuration as per your requirement.
Typically a VPS configuration with 1GB RAM is sufficient to run 2 MT4 platforms and several EA on them. VPS with 2GB RAM can run between 3 to 5 MT4 platforms.
The money spent on tenting the VPS is worth while since it frees up your personal computer to do things you like. There is no need to constantly monitor the home system or worry about outages. The main benefit of course is that the EAs can perform as they were designed to be and you would be taking a step closer to being on level field as the major Forex players.
For the retail Forex trader, VPS may improve over all profitablity and bottom line by providing:
- Advanced hardware for a fraction of the cost.
- Utilize top-tier data networks and connectivity, without cost of meeting the entire contract yourself.
- Configuration of fail-over and high-availability systems, to ensure continuity of hosted applications.
- Easy scalability – start with resources you need and expand later if required.
- Professional maintenance and administration of the physical hardware and network components.