Virtual Private Server (VPS) services are gaining tremendous popularity among both retail as well as institutional traders in the Forex markets. Forex traders face a multitude of challenges while tackling the highly volatile Forex markets, which necessitate the need for new technologies that aim to bring down the disparity between winning and losing trades. The Forex market witnesses an immense amount of liquidity that has the capability to induce large movements in the markets within seconds. Therefore, investors, as well as programmers, are always on the lookout for new avenues that seek to lower the time of communication between a trader, his terminal, and the interbank exchange.
How Does VPS Help In Forex Trading?
Conventional forms of Forex trading involve sending orders to the global liquidity pool or interbank exchanges through trading terminals that are exclusively offered by Forex brokers. There are different types of trading platforms in the market, but a unique aspect of these terminals is that they are hosted on a trader’s PC or his trading terminal. Therefore, the connection speeds and the latency are determined by the performance of the PC and the broadband connection used to access the broker’s price feed. Lower latency and lower performance can lead to significant delays between order placement and the order getting filled in the market, which can result in substantial slippages and wrong entries. Due to the volatility of the Forex markets, slippage is an integral part of trading. However, there are other factors of trading such as loss of connection, computer glitches, platform troubles, programming errors, and other aspects of trading that can also contribute to a bitter trading experience. Therefore, the speed and efficiency of trading are determined by external factors such as the efficiency of the equipment used for trading, and these problems are usually beyond the control of a trader. A VPS, on the other hand, is a private server that acts as a remote device which can be used to host a trading terminal without worrying about connection speeds or offline periods. A Virtual Private Server works as a remote computer that can be accessed through a regular PC and a broadband connection, but the VPS is active around the clock to ensure that the trading platform is connected to the liquidity provider without any interruption to the connection. Therefore, traders can be assured that their trading terminal is online during market hours, without worrying about latency issues during high-volatile events.
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Another advantage of VPS is that a trader can access his trading account without having a dedicated computer, which further helps large retail as well as institutional traders to access their accounts from any device. VPS also enables fund managers to assign different accounts and terminals to various traders, thereby allowing them to control their accounts in an efficient manner.
Effectiveness Of VPS In EA Trading & Automated Trading
VPS finds more application in the field of automated trading, as trading with Expert Advisors (EA) and other automated trading tools require the platform to be online throughout the week during multiple trading sessions. EAs are designed or programmed to open trades automatically according to a prescribed set of trading conditions, which are usually met at different trading intervals. Traditionally, traders used to host their EAs on dedicated PCs, which were left on standby for hours or days without any interference from the trader. However, setting up a PC with a home or office internet connection is susceptible to several types of issues such as loss of broadband connection, PC problems, or even human errors. The nature of EA trading prevents the need for traders to be manually involved in any way while the platform executes orders, which requires traders to set up their trading platform and leave it online to do their job. Any disconnection between the platform and the trading server can render the EA inefficient, which can not only prevent the EA from doing its job, but it can also lead to disastrous trading results. It so happens that an EA might open positions while the platform is online, but a drop in connection can lead to the positions being maintained on the server, which can result in potentially high losses if the platform is not able to reconnect within the specified time. Frequent disconnections and interruptions can also result in a weak EA performance, which can lead to massive complications to the EA program.
Cost Of VPS Server Hosting
VPS servers involve investing in dedicated infrastructures such as servers, terminals, and other accessories to provide a 24 hours platform for traders to access their trading terminals. Since the infrastructure is expensive to install and maintain, traders are forced to pay for VPS services that can vary according to the services used and the sort of performance required by the trader. Several third party VPS companies provide exclusive access to VPS servers on a monthly payment basis that can start from $25 per month to as high as $250 for high-end servers. It is also not uncommon for VPS service providers to charge higher fees for customized services, Some Forex brokers also provide VPS access for a nominal monthly fee, which allows traders to work with a simple login that can be used to access the terminal from anywhere in the world.
Finding Forex Brokers With Free VPS
VPS can prove to be an expensive affair for retail traders who trade the markets with a small capital. The average cost of VPS can range from $25 to $250 per month, while some VPS servers can be hugely expensive. The cost of a VPS can quickly spiral out of hand, aided in part by the cost of spreads, commissions, and SWAPs. Small retail traders usually scalp the market for small gains, which can inadvertently hurt their chances for consistent profits if they also need to pay for VPS services. However, traders can make use of the free VPS services offered by individual Forex brokers that only require traders to maintain an average trading volume on a monthly basis. A handful of Forex brokers, like HYCM and XM, has dedicated VPS services that are aimed at traders who are unable to bear the cost of dedicated virtual private servers. Although free VPS services are considered to be complimentary in nature, Forex brokers may charge account inactivity fees or other charges if traders are unable to meet the desired trading volume.
What Should I Consider While Choosing A Free VPS?
Every Forex trading account comes with several terms and conditions, which are usually ignored by most traders. However, VPS is a concept that involves a high cost, especially if you are choosing a free VPS offered as part of a promotional program. Although few brokers offer a free VPS along with their brokerage service, some brokers offer a free VPS only if traders can satisfy several trading conditions. Traders should always read the fine print before choosing a free VPS account. Brokers are notorious for including several restrictions on trading, which may inhibit a trader’s freedom, and some brokers might require their clients to overtrade, which can lead to a change in strategies and a change in fortunes. Therefore, always ensure that the conditions provided by the broker are not overbearing on a trader’s psychology before choosing to stick with a broker that offers a free VPS service.
Are There Any Disadvantages of VPS In FX Trading?
VPS do have a few problems such as the cost of trading and the unlikely event of a VPS failing during volatile market conditions. Although VPS machines are routinely maintained for peak performance, there can be instances where servers may be hacked or rendered ineffective for brief periods of time, which can affect the quality of trading. There is also the possibility of VPS servers rebooting during regular trading hours, which can hinder the EA’s performance. VPS trading has a lot of advantages in Forex trading, while the disadvantages are negligible. The only consideration is the cost of a VPS service, but if you can find a Forex broker with free VPS, you can save on costs and enjoy the numerous benefits that thousands of successful traders from around the world enjoy with a VPS system.