Forex  VPS

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What is a VPS?

VPS is one of many acronyms that stand for Virtual Private Server which are commonly used by Forex traders.  Let’s first define what we are talking about when we say VPS and then we will explore the costs and benefits of various VPS offerings.

A VPS by itself is a shared ‘virtual’ server usually running software such as Microsoft Hyper V or Parallels that allows many users to use the same physical computer.  Some may host 10 clients per machine but it could be as many as 50 or 100 or even more if it’s a powerful server.  This is not a bad idea by itself, as many users do not eat into a server’s resources extensively, so conceptually it’s a sound decision for an administrator to purchase one server with a lot of resources and then share them with all of his users.  However if the VPS is not setup properly, or the users are overwhelming the resources, this can cause a problem for the user.

This type of setup can be used for any application, as users are given access to the Windows desktop.  But with the recent growth of online Forex trading, traders needed a solution that VPS provided.

Advantages of using a VPS


VPS providers usually guarantee 99.9% uptime by providing infrastructure with multiple redundancies, such as backup power generators and backup internet connections.  Users may not have the money or desire to do this in their homes, so a VPS is a good solution for those who need a computer to be always running.

This was originally the largest issue that created the niche market of Forex VPS.  Users did not want to leave their computers running all night, or in the case of power outages, could not.  Uptime while running a Forex strategy is important for obvious reasons, if the computer is down your strategy cannot execute trades.


You can access the VPS from anywhere.  Normally VPS are accessed by using Windows Remote Desktop or RDP, Logmein, Radmin, Teamviewer, or other connection software.  That means if you are travelling, or visiting someone else’s office, you can access your VPS from there.


VPS is all about infrastructure.  Security is an important aspect not thought of by many users.  Even if you don’t require heavy security, it can also be a hassle if your files are compromised.  The worst thing that could probably happen if you weren’t keeping sensitive files on your VPS would be that the intruder trades your account poorly.  But this could be stopped by a quick phone call to your broker changing your password or disabling your account.

Having a VPS is secure because VPS providers usually have secure facilities, which may include alarms, multiple electronic keyed entries, man traps, and guards.


VPS providers usually have high bandwidth both up and down.  Residential or even business class internet accounts may have good download speeds but not upload.  This high bandwidth such as a DS3 or OC3 is usually expensive, but because it’s shared in the entire facility, a VPS customer is able to use that bandwidth without spending a lot of money.  The bandwidth is also usually guaranteed.


VPS providers are located in data centers a few hops away from your counterparties.
Some providers are proud to display latency charts from tests done to various brokers.

Although this has become a big issue for clients when deciding which VPS provider, it’s questionable how much latency is important for retail trading strategies and especially for MT4 EAs.  For example, one popular EA experienced better results than his friends who were significantly closer to the broker both physically and in hops.  In fact his VPS provider was in Asia, latency to the broker was 10x larger than that of his friends, and his performance was better.  There are cases like this - which doesn’t mean latency is not an important variable - when its importance may simply be overstated.


Finally, possibly the most important reason why VPS is a good choice for many traders is cost.  Traders can setup a computer, which is a cost of doing business.  However setting up the infrastructure offered by VPS companies can be expensive.  Also you would need to be fairly technically savvy to do so.  Still VPS provides a good value considering time and money invested in the setup of VPS.

Provider Comparison

Now that we’ve made an argument why VPS is a good solution for traders, we need to consider that each VPS provider is unique, offering different features.  To be fair to all providers, we will not mention any provider by name; simply we will examine differences of some of the providers offer.

Features that vary by provider:

• Network distance to brokers – This is usually measured in pings and hops via testing tools, not the physical distance (although in many cases physical distance can affect the ping time) such as 10ms.  Some providers will even have a VPS solution in the same physical rack in the datacenter as the broker server

• MT4 tools pre-installed – Some VPS providers will offer trading software pre-installed on the computer such as the Meta Trader 4 platform

• Operating Systems – Some will offer Windows 7, Server 2003, 2008, or XP

• Virtual Hardware – Although any VPS is ‘shared’ with other users, some providers will allocate more hardware such as 1GB of RAM specific to your account

• Support – Some providers will offer additional support such as help with installation, assistance with Forex related applications such as the installation of expert advisors, and other support

In the final analysis, a VPS is a cheaper solution than what a professional trader should be using; either their own server or a fully dedicated server.  A dedicated server is about 3 – 5 times the price of a VPS, so for retail clients or those with small accounts, paying $150 / month is not feasible.  However, professional traders and hedge funds can spend up to $5,000 a month or more just on dedicated server hardware. 

The pro side

For hedge funds and other large institutional traders, they may rent suites in a number of market-friendly data centers that are close to the markets.  Some data centers have a financial industry focus, and build their networks to facilitate traders.  This development centered around exchanges (commodity markets and stock markets) although Forex banks and brokers are now starting to house their servers at the same locations.

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