How to Choose a Forex VPS Provider
If you are looking for a Virtual Private Server (VPS) to let you improve your trading, then there are four things to look out for when choosing a provider. They are latency, quality, support and price – and that’s in order of priority, with price being the lowest. Why? Read on!
As I described in previous article “4 reasons why you should use a VPS for Forex trading“, apart from making the right trading decisions (your responsibility!), a big factor affecting profits is latency, which is a measure of the speed at which those decisions are executed. By choosing a VPS with the lowest latency and therefore the highest speed of transmission of your orders to your broker’s trading system, you have the best chance of avoiding slippage and loss of profits.
The first point to check is how close a VPS is physically to your broker’s server. The closer it is, the lower latency will be. In other words, don’t choose a VPS in New York if your broker’s server is located in Europe.
You will also want to put a figure on the latency of different installations, so that you can compare. There are typically two options for this:
- Use the “looking glass” tool that some providers offer on their websites, so that you can try before you buy. Enter the network (IP) address of your broker’s server to see what the latency is in milliseconds. Ask your broker for this address, and make sure that you get the one for the real trading system, not the demo system that may be housed elsewhere.
- Ask the VPS provider to run a “ping” test to the IP address of your broker’s server. This is a standard network test that gives a figure for latency – it’s also the basis of the “looking glass” tool above. At the same time, you can also ask the provider for “trace route” information to see how many network nodes or “hops” are in the path between the two servers. The fewer systems in between, the better.
How do you interpret the figures for latency? For comparing between providers, there’s no problem: the lowest latency wins. In absolute terms, use the following scale (where “ms” stands for milliseconds):
- Below 1ms is superb
- Below 5ms is excellent
- Below 10ms is good
- Below 20ms is acceptable
- Above 50ms is not recommended for short term trading systems
Naturally, the VPS also has to run without interruption and be free from operating problems. Factors to take into consideration are:
- Hardware quality and power. Not only must the provider offer reliable, fast servers, but also enough system resources such as main memory. For example, 1 GB of RAM is a minimum when you run 3 or more MT4 terminals.
- Operating system. With a choice often between Windows Server 2003 and Windows Server 2008, the earlier 2003 version is more stable (stays up longer) and needs fewer system resources (runs faster).
- Power, cooling and security. Uninterruptible power supplies are best for both servers and cooling systems, with the right levels of security to prevent physical or data breaches.
- Data backup. Find out how frequently they are done, how securely they are kept, and how rapidly data can be restored to a machine from a backup if required.
Murphy’s Law says that something, somewhere, will go wrong. To fix problems, a VPS provider must offer you a support service that is competent, available and responsive. Remember that a 99% level of systems availability may sound good until you realize that you could lose more than three full trading days in a year!
As support is often something you only experience when a problem arises, it may be more difficult to gauge the quality of a provider’s service here. However, you can try the following: ask a technical question to the provider’s support team to see how well and how fast you get an answer; and/or visit online forums hosting discussions on this kind of subject to see if any providers have attracted specific comments about their level of service.
When you have checked out the points above, then finally, you can look at price. Yes, for the group of providers that satisfy all your other criteria of latency, quality and support, then you can use price as the final deciding factor. But don’t use price as a starting point when looking at Forex VPS providers – cheap, poor quality installations will end up costing you far more in profits than you can ever save in hosting fees.
Okay, that’s it for today. I hope you liked today’s blog post. If so, please don’t forget to share it with other Forex traders.
Last but not the least, here are two Forex VPS providers I use for trading. Both providers offer high-quality services and great support.
PS: Have something to add? Comments are welcome too.