Improving your Forex trading speed while cutting costs is an important factor for all traders. Securing a competitive edge and preventing theft from cyber criminals has never been more vital than in today’s current landscape. In the wake of COVID-19, we have seen a real push towards internet-based trading in the majority of financial industries. Fintech has exploded in the last year, providing anyone with an internet connection the ability to complete a trade at their fingertips.
However, in the world of Forex, we’ve seen a range of different developments favoring a more secure and faster approach. One of the most interesting developments is the increasing use of Virtual Private Servers , or VPS, to circumnavigate the need for a traditional internet connection when trading. The low latency provided by VPS as well as the increased security result in Forex traders experiencing less negative slippage and avoiding wasting time with requotes and off-quotes.
This article will look into VPS and explore the benefits it provides for Forex traders as well as its impact on latency. We’ll also discuss how it can help your Forex trading reach new heights and secure you a competitive edge.
VPS & Forex
Forex, or foreign currency exchange, has been in a real state of flux since the beginning of the pandemic, and has presented traders with several opportunities . However, these opportunities can also come with additional risks. Two currencies can produce great profits or bad losses if judged incorrectly. More importantly, working with a computer that lags behind in response time (referred to as high latency) can prove disastrous for a time sensitive deal.
While speed is a concern for most Forex traders, another main concern is protection from hackers. A VPS, or Virtual Private Server, gives you an added layer of security. Running your trading through this type of server is much safer and faster than working from your own stationary server and can also be more affordable as well.
A VPS is essentially the hosting equivalent of a subscription service such as Netflix. As opposed to owning, you are basically renting your space on the server. VPS servers can also be partitioned for each individual trader , with specific IPs given to traders sustaining specific service. This provides protection from hackers similar to that offered by VPNs. Regardless of where you are, you can access your VPS and it’s available around the clock, even in the event of a power outage.
Like all subscription services, once you quit your VPS service your partitioned space on the server is wiped, with a new subscriber being given a new IP. VPS gives you your own RAM, data limits, OS, etc, so it is different from other websites that make you share resources. In addition, virtual private servers are more flexible than dedicated servers.
Forex markets hit a high of $6.6 trillion per day in 2019, so despite what cynics say, it’s a huge industry that has been growing year on year. Security and speed will continue to be a driving factor behind the success of many current and future traders.
Latency & VPS
The bane of many a trader’s existence, latency is the delay between your computer’s command being sent and the server (trading exchange in this case) receiving the command, known to the gaming community as a ‘lag’. In the Forex world, this can be the difference between making a successful or failed trade.
Latency, in layman’s terms, is the amount of time a command takes to travel a computer network. It is generally quantified in milliseconds. A latency level below 100 milliseconds (ms) is considered decent, whereas a latency level below 50 ms is very good and ideal for Forex trading.
Normal cable internet or DSL connections have latencies that hover below 100 ms, while satellite connections have latencies of 500 ms or even higher. What difference does a few milliseconds make? Depending on the volume of trading you are doing, this can add up to thousands of dollars lost over the course of a year, not to mention wasted time dealing with requotes.
Virtual private servers can alleviate these issues by providing traders with a secure, speedy, and reliable platform to conduct their trades. While more expensive than other hosting options such as shared hosts, VPS platforms still offer greater power and speed. This is why the importance of having a VPS shouldn’t be overlooked for any trader, be that a beginner or a seasoned veteran.
Why virtualization matters
From a technical standpoint, another way in which high latency is prevented is through direct market access (DMA) , an account type which directly connects the buying trader with the order book before an exchange. This reduces the amount of steps needed to complete a trade. Until recently, most retail traders did not have access to this technology, meaning this advantage was almost entirely with institutional traders. However, DMA is only as good as the latency levels within which they operate.
Virtualization has brought positive changes to the majority of industries it has affected, but with the move to the digitalization of wealth, online traders can be at risk from cybercriminals. Therefore, protecting yourself when trading is more important than ever, especially when even the top trading platforms have significant vulnerabilities that can be easily exploited.
In the context of Forex trading, virtualization creates compartmentalized virtual servers, which gives traders specific space at a price you can afford, and scalable to whatever you need. This helps avoid fees associated with the trading engines that are commonly used by Forex traders.
Using a VPS, you can affect trades from wherever you want, because the software on the VPS doesn’t require a traditional internet connection to make trades. Cutting out infrastructural costs are a great way to improve your trading success and margins. Utilizing VPS is a viable place to start, and can help develop your competitive edge.
Creating a competitive edge
With minimal barriers to entry, there has been a real influx of traders in recent years, which in turn has an impact on the market. To be successful with all the competition, limiting your costs and improving your trading is key. As most people will tell you in the Forex game, there are seven major currency pairs, which each have different extraneous variables affecting them. Finding ways to create a competitive edge for your trading portfolio is vital.
With the use of VPS, traders can benefit from locational access and cutting overall costs. Furthermore, with VPS they have the ability to trade automatically any time of day or night, which can reduce stress and save a lot of valuable time.
Unsurprisingly, Forex and VPS work incredibly well together, creating a 24/7 trading capability that is uninterrupted and available worldwide. With reduced latency and the availability of scalable options, it’s pretty easy to see how the benefits can affect traders in a number of ways.
Having near 100% uptime for traders backed by Atlantic.net’s SLA makes VPS options a great addition to their portfolio. The seamless remote execution of automated trading strategies opens up a plethora of new opportunities to make better trades.
A viable direction for Forex trading
In short, VPS runs remotely and allows you to be completely independent of unforeseeable problems that can arise when working with your own server. For most traders, security and speed is one of the major factors in investment decisions, so having a VPS that can give you robust security is a must. This will not only keep your system safe by preventing data from being broadcasted across a larger internet network, but also utilizes the cloud to transport data , making it more secure.
Ultimately, whether COVID-19 was a catalyst or just a coincidence for the rise in FX traders using VPS remains unclear. However, the simple fact remains that VPS services have become very popular in recent months and years for more reasons than one.