The foreign exchange market is highly lucrative. Traders who understand how to leverage the market’s profit potential earn comfortable incomes frequently. However, the need to generate ever-higher profits is driving an automation boom. Notably, automated forex trading is a common feature today, and it will increase as more traders learn its benefits.
Nonetheless, automating your trading activities does not solve all your problems. For example, if your power provider is inefficient, your trading system will keep running into issues because of blackouts. Also, poor internet connection could adversely affect your algorithmic FX trading system significantly. Therefore, you need to find a way through which your trading system can operate unceasingly without interruptions. Fortuitously, there is a forex VPS (Virtual Private Server) to solve the problem.
What is VPS?
Obtaining a virtual private server (VPS) is the most advanced thing a serious forex trader can do. A VPS is a variant of a data centre that hosts your computer. It entails virtualizing your physical computer in that you can access it from any internet-connected device. Usually, VPS providers connect the datacenter to high-speed internet as well as maintaining a reliable power supply. As such, a trader can use the VPS to access the market faster hence little or no slippage.
Utilizing VPS for forex is more than just fast internet access and a 24/7 uptime. Usually, many VPS providers place their servers close to major brokers, either in London or in New York. This way, the latency that traders experience during trades is significantly low. Being a fast-moving market, it is prudent to ensure that latency in forex is as small as possible to avoid the costs of slippage.
How does a VPS for forex work?
To understand the significance of a VPS, consider how regular trading works typically. On the one side, a trader is logging on a computer. The computer connects to the internet and the trader logs in to the trading platform (usually the MetaTrader 4 or 5). If the trader is using forex expert advisors to trade, it means he can stay active in the market without staring at the screen the whole time.
However, what happens when the computer heats up too much, and it shuts down? Or there is a power outage? It means that your computer will no longer access the internet, meaning any access to the trading platform. In the end, the trader will lose money because the expert advisors are not working.
The traditional system of trading is high risk. How is using a VPS different? When using a VPS, a trader has two avenues to connect to the internet. In the first place, you can connect directly using your computer. However, this exposes you to the risks like a power outage, internet blackout, or computer failure.
In the second place, you can connect to a VPS located closer to your broker. Here, you can load the FX expert advisors onto the server and then configure them correctly. If the EAs do not require frequent reconfiguration, then you can disappear for as long as you want because the automated trading system on the VPS runs for 24/7. The VPS will always remain connected to the MT4/5 platform through the internet.
Speeding up profits using VPS
Traders opt for automated FX trading to avoid slippage. It is the time difference between when a computer authorizing an entry or an exit in a trade and when the trader actually enters or exits the trade. Usually, the slippage gets worse when latency (time difference between trigger and response of the computer) is more significant. Latency is a big problem when the internet connection is weak or when the computer is slow. Such issues could lead to failed trades and loss of money.
Accordingly, the VPS speeds up profits by significantly reducing the latency (usually one-millisecond latency). Most, if not all, VPS providers have access to high-speed internet, usually 1 GBPS or more. In such an environment, your forex robot will operate at optimum potential, and it earns you humongous profit in a short time.
The second trick to speed up profits is to select a VPS that is closer to your broker. New York and London are the financial capitals of the world. As such, most brokers have their home here. Subsequently, VPS providers would instead locate their data centers in these locations to reduce the distance of communication between the MT4/5 servers and the VPS. The smaller the distance, the lesser the slippage.
Any serious trader understands the significance of automated trading. Notably, a forex EA is objective, and it is not susceptible to psychological trading. However, this automated system requires that the computer be always online for maximum profits. Since this is impossible, a VPS is an ideal choice for a trader who wants to maximize profits. However, you should ensure that the VPS provider has access to superfast internet and that the location of the data center is closer to your broker.