VPS and Latency in Forex
In a technical context, a lot of what happens in the forex market is packaged and sent out as data, be it news feeds, price feeds or transmissions of trade orders. Just as it takes time for you to travel from one town to another, it also takes time for data feeds to transit from point A to point B; in this case from the trader's computer to the broker's server and back. This time delay is what is known in forex as latency. Latency is measured in milliseconds. The lower the latency period, the faster the trader can get price feeds and get trades executed.
Latency is a phenomenon that is a constant in forex. Latency always exists, because simple physics dictates that it must take time for data feeds to travel from trading stations across the world to the broker's servers. With forex trading, faster is better and the challenge has always been how to reduce the amount of time that data feeds travel between trading stations and servers so that faster executions of trade orders are attained.
Institutional traders invest millions of dollars in building the fastest fibre-optic transmission cables to carry their data to and from the servers of the exchanges where they trade. On top of that, some will have thier offices in the same building as the exchanges to further reduce the distance their order requests must travel before they are executed. Retail traders in forex do not have the luxury of such resources. As such, their best bet is to host their software on servers that are in close proximity to the broker's servers to improve their trade execution times and reduce the likelihood of requotes. This is where the forex VPS comes in. Brokers will offer a VPS server usually in close proximity to their servers which their traders can access to run their trading software to execute their trades.
How to get a Forex VPS account
The process of using a forex VPS starts with subscribing to a VPS plan from a provider. Each plan has its specific features when it comes to number of CPU cores, the bandwidth (RAM) and the storage space. There are hundreds of VPS providers available but a simpler option is to find a broker that offer their traders VPS technology. Some brokers will even offer a free VPS account for traders that meet certain requirements, like having a live forex trading account with that broker. This should also make it easier to find a VPS that is acutally located close to the brokers own servers.
How to Install an EA on a Forex VPS
Installing programs on your Forex VPS is exactly like installing them on a normal PC running Windows. Simply use the pre-installed web browsers (Chrome or Internet Explorer), to navigate to the software download, then run the .exe or install file, and follow the prompts to install the software. All default settings and locations will be appropriate.
If you are using a broker's VPS server, make sure it is one which can serve your needs. The most important factor to watch out for is stability and uptime. A stable VPS connection is one which is not affected by activities of other users.
Step 1: Find a broker that offer VPS. The broker will then send you BDP files from the broker to attach to the local computer. Download your broker's RDP and save the files to the desktop of your local computer.
Step 2: Launch the forex VPS application by clicking on the remote desktop (RDP) icon on your desktop. This will attempt to launch the remote desktop application, which connects your local computer to your forex VPS.
Step 3: In the next pop-up window which shows, enter the admin username and other details provided by your broker.
This should connect you to the remote desktop which is where your broker has hosted the MT4 client and the forex VPS.
Benefits of Using a VPS and EA for Trading
Trading with a VPS has several advantages.
a) Traders are able to run EAs on their trading platforms 24/7 and capture more trade opportunities than they would have running the EA from a local computer. If the trader is renting an EA and pays a monthly subscription, then it would make all the sense in the world to get the EA to do more work.
b) Using a forex VPS removes the element of computer crashes and network disconnections, which can be a major distraction for the trader.
c) Using a forex VPS to run your EA will mean your trades will run even if you do not have access to your computer, this is why traders who cannot constantly monitor their trades could benefit from using a VPS system
.
d) A forex VPS hosted adjacent to the broker's servers reduces the distance your trade orders need to travel decreasing the chance of slippage and latency issues.
e) Security is another element of forex VPS trading. Using EAs and add-ons on a VPS removes the possibility of local computers being infected by malware and other malicious programs that may have been encoded into a forex EA or add-on. Since forex VPS systems are built with innate anti-malware and antivirus software, they can take care of these threats without a problem.
f) Using a forex VPS will can reduce but not eliminate slippage by improving the speed your trades are executed at.
Conclusion
We end this article with a caveat. Using a forex VPS does not replace the skill or accuracy of a forex trading robot. The robot still has to deliver on performance and returns. The forex VPS is simply there to facilitate its function and not affect the strategy on which the EA was programmed.
Popular forex brokers that offer VPS services include:
Pepperstone
Pepperstone is a Forex broker which has been operating online since 2010. It is regulated by the ASIC and has offices in numerous countries including the United States, China, Ukraine and Australia. Pepperstone also provides a VPS service that is designed to be used with the popular Meta Trader 4 trading system .
Additionally, expert advisers are encouraged to be used. It should be kept in mind that Meta Trader 4 is available for demo accounts as well (although it will expire after 30 days of activation). 31 currency pairs are offered alongside precious metals (gold and silver). Two types of accounts are available. These are the standard and the "Razor" accounts. While a minimum account size of $200 dollars is necessary, the fact that spreads as low as one pip are available allows Pepperstone to be an extremely attractive option for those who wish to trade in anonymity.
While offices are found in the United States, the platform is not currently available to traders within the United States. However, a dedicated foreign VPS system could possible circumvent this challenge.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74% and 89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
XM.com
XMis one of the most diverse and robust Forex brokers currently available. One of the reasons for such fame is the flexibility which is offered.
XM.com has provided VPS solutions within their Meta Trader 4 system since the autumn of 2013 and EA services are likewise allowed. There are more than a dozen electronic payment options provided (PayPayl is not included) and XM is said to host one of the most helpful customer service centres on the market.
Four different account types are available and Islamic trading is supported. Forex, CFDs, oil and precious metals are all trading instruments while leverages of up to 1:888 have allowed many to enjoy handsome profits (not without a certain level of risk, of course).
Variable spreads are offered and scalping is allowed for those who wish to enjoy short-term trading opportunities. Mobile, automated and one-click trades are supported. Finally, XM.com offers Meta Trader 4 with their demo account and there is no expiration period.
BrokerNotes.co 2023 Overall Rankings
To recap, here are our top forex brokers for 2023, sorted by Overall ranking.
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At BrokerNotes.co, our data-driven reviews of online brokers are based on our own extensive testing of each broker's products and services as well as the qualified observations of our expert editorial team. In conjunction with our sister site, ForexBrokers.com, we’ve published well over 100,000 words of research and collected thousands of data points across hundreds of variables. Our in-depth trading guides are created with the same rigorous, data-driven approach.
Our proprietary Trust Score rating system tracks data from over 100 regulatory jurisdictions to help forex traders understand the regulatory status of their forex broker and choose a broker that they can trust.
Our editorial team is led by Steven Hatzakis, an industry veteran with decades of experience and a deep understanding of the forex market. Our team conducts thorough testing on a wide range of brokers, platforms, products, technologies, third-party trading tools, and mobile apps. We also test for the availability of high-quality educational content, actionable market research resources, and the accessibility and capabilities of mobile platforms. All of our ratings and rankings are based on the collection and validation of thousands of data points and our in-depth product testing.
Part of our testing process involves in-depth research into commissions and fees. We dive into each broker’s trading costs, such as VIP rebates, inactivity fees, custody fees, bid/ask spreads (we always strive to determine the average spreads for each broker to better serve our readers), and a variety of other fee-based data points.
All websites and web-based platforms are tested using the latest version of the Google Chrome browser. Our Desktop PCs run Windows 11, and we use MacBook Pro laptops running the latest version of macOS to test trading on the go.
When testing mobile apps or mobile products, we test on both Apple and Android devices. For Apple, we test with the iPhone XS running iOS 16, and for Android we use the Samsung Galaxy S9+ and Samsung Galaxy S20 Ultra devices running Android OS 13.
All of the content on BrokerNotes.co is researched, fact-checked, and edited by members of our editorial team. Our ratings and rankings are driven by our independent data collection. We may use generative AI tools to assist in some of the rote aspects of our content production processes, but the substance of our content, as well as our opinions and evaluations are based on our extensive research and product testing. Read our Generative AI policy to learn more.
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There is a very high degree of risk involved in trading securities. With respect to margin-based foreign exchange trading, off-exchange derivatives, and cryptocurrencies, there is considerable exposure to risk, including but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of a currency or related instrument. It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable, or that they will not result in losses. Learn more about foreign exchange risk.
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