Ever seen a great trade set up fall apart due to poor fills? You click buy, the market spikes and you are 3 pips in the negative before your trade is even in. When it comes to forex trading, time is money and every millisecond counts. Big banks and institutional players have fast computers and a direct line to get the best prices. If you are operating a scalping bot via your home internet connection, you’re giving away money.
For profit booking and keeping the slippage to a minimum, you should consider investing in a high-end setup that is directly next to your broker’s matching engine. Today we’re going to talk about why having your trading platform in a major financial hub, such as London, New York, Frankfurt, and Amsterdam is the best thing you can do for your trading career.
How Does Slippage Happen?
Before getting into the importance of a dedicated trading server, it’s necessary to discuss latency and slippage. Latency is the time it takes for your trading platform to send your order to your broker and for your broker to send the confirmation back.
Suppose you wish to purchase EUR/USD at 1.0850. Your EA places the order. However, since you’re trading from a home environment, connected to the internet via Wi-Fi, it takes 150 milliseconds for that data to cross the globe to your broker. During that imperceptible period of time, the market reacts. Your order fills at 1.0853. You instantly lost 3 pips. This is known as negative slip.
The largest slippage events occur during the fastest-moving markets. On news events, such as Non-Farm Payrolls (NFP) and central bank decisions, prices can swing from one extreme to the other in a matter of seconds. If you place an order during that spike, the fill price will be whatever the market is at, not what it was at the time your EA hit buy.
Suppose you’re using a scalping EA that makes 20 trades per day and 22 days per month. That is 440 trades. If the overall slippage is 0.5 pips per trade and 1 pip is about $10, then you are losing $5 per trade.
- Per month, that is $2,200 lost.
- That’s $26,400 in productivity lost annually due to slow connection.
You can research and find the best broker with the best possible spreads, but if your trade is slow, you end up losing all that benefit to slippage.
The Solution is Co-Location
With a virtual private server (VPS) in the same data centre as your broker’s matching engine, your physical distance is almost negligible. Your latency drops from 100 milliseconds to sub-1 millisecond.
That speed means your execution window is too small and the market doesn’t have time to move between the time you send the order and the order is filled. You are able to trade at your desired price without any awkward slippage.
So, where should your server be? Forex trading is centred on four main hubs in the world:
1. New York
New York is the financial capital of the US. The famous NY4 Equinix data center is utilized by many of the top-tier ECN brokers. When your broker’s servers are in the United States, choosing a NY VPS will provide the quickest order transmission. Colocating your VPS here reduces your latency to less than 1 millisecond. The time frame tightens up and market prices simply have no time to move against you.
2. London
London is the absolute center for the global forex market. During the overlap times, the European session moves huge volumes, and the London based LD4 data centre is home to the same engines as dozens of the world’s largest Forex brokers. Having a London VPS is unavoidable if your broker is FCA regulated or based in the UK.
3. Frankfurt
Frankfurt is the financial heart of mainland Europe. It hosts the European Central Bank and a huge network of institutional liquidity providers. A Frankfurt VPS offers an amazingly quick, direct connection to the brokers in mainland Europe. The location will provide your Expert Advisors with seamless 24/5 uptime if your broker is based in Germany or central Europe.
4. Amsterdam
Amsterdam has established itself as a leading tech and finance centre, particularly since Brexit. A number of brokers and liquidity providers have established their infrastructure here to cater to the needs of their clients in Europe. When you select an Amsterdam VPS, you will be directly linked to one of the fastest fiber-optic networks in Europe, ensuring that you’re automated trading bots execute trades in sub-milliseconds.
(Note: If you’re trading on Polymarket, you should choose our specialized Dublin servers which are built to handle specific blockchain interactions. For pure forex or MT4/MT5 trading, only use the big four).
Building a Setup for Serious Traders
If you’re trading several pairs, time frames and heavy custom indicators, you need serious parallel processing power. When MetaTrader terminal freezes during high impact news events, it means that your server is running on old and shared hardware. The ‘Trade Context Busy’ errors will begin to appear during the period when the market is moving the quickest. At TradingVPS, we create high quality environments for serious traders.
- High-performance AMD Ryzen 9950X CPU: We use the absolute best processors available. This CPU will keep your platform running smoothly even during unexpected market surges.
- DDR5 RAM and NVMe SSD storage: Trade bots are regularly reading and writing log files. Standard hard drives will slow the EA down. Enterprise NVMe SSDs combined with an amazingly fast DDR5 RAM ensure instant data caching and smooth terminal performance.
- Ultra-low latency to major trading platforms: Our servers are located in the world’s leading financial hubs, which reduces your latency to 1-5 milliseconds.
- Free DDoS protection: We ensure your connection is kept safe and free from the effects of malicious actors.
Steps to Optimize Your VPS
After you’ve configured your VPS in London, New York, Frankfurt or Amsterdam, you want to ensure that your trading platform is operating as efficiently as possible. Here are a few simple tips to optimize your MT4 or MT5 terminal:
1. Match your location
Always select the data center that is nearest to your broker’s server. Get a NY4 VPS if your broker is using the NY4 infrastructure. If they are in the UK, select London.
2. Turn off what you don’t need
Close off any unnecessary chart windows. Each open chart consumes memory and CPU cycles. If not required, disable news feeds and email notifications in the terminal.
3. Limit your chart history
In your platform settings, you can adjust the “MaxBars” parameter to 5,000 or lower. Most trading platforms load a ton of historical data, and your EA may not even need it. This can free up RAM and keep things speedy.
4. Adjust your EA settings
You can now reduce the slippage because you are running on a server with latency under 1 millisecond. Adjust your max slippage of your EA to 1 or 2 pips. This is a command to your bot to reject any poor fills and thus protect your account during crazy volatility spikes.
Final Thoughts
The logic in your trading strategy is as important as your hardware and network. Running your systems in London (LD), New York (NY), Frankfurt (FRA) or Amsterdam (AMD) ensures your execution speed is maintained, slippage is significantly reduced and your automated system can trade as you intended.
Taking into account all trading needs, TradingVPS is the best solution for traders dealing with futures, forex, cryptocurrency and prediction markets.
FAQs
A Forex Virtual Private Server is a fully dedicated, working computer in a well-known data center. It hosts your trading platforms and automated algorithms, which can trade 24/7 with incredibly quick speed, without the need to depend on your private home computer or WiFi link.
The largest brokers and liquidity providers have their matching engines hosted in major financial hubs like New York (NY) or London (LD). In selecting a server in these very locations, you physically co-locate your software with your broker. This drops your order transmission time to less than a millisecond, virtually eliminating negative slippage.
Yes. You can access your VPS from any location around the world with Remote Desktop Protocol (RDP). You can log in securely and check on your trading bots any time from a Windows PC, Mac, iPad, or smartphone.
Latency is the time it takes for you to place your order and for it to be completed. If there is high latency, the market will have ample time to move against you before your trade is executed. When you trade with a server located in Frankfurt (FRA) or Amsterdam (AMD) near your European broker, you are guaranteed to receive the price you actually clicked on, and thus save money on each trade.
There’s clearly a significant advantage for expert advisors, who can trade 24 hours a day, but manual traders still have a huge edge. A VPS offers you a stable and lag free environment. It is not affected by power outages in your local area. Thus, your pending orders and stop-loss will be handled by enterprise-class infrastructure, not by an unreliable home internet connection.
