Trading on a VPS (Virtual Private Server)

What is a server and what should be paid attention to?

Repeatedly we are being asked: "what actually is a server?" In simple terms a server is a computer, which is provided by a so-called hosting company on which you can log on to without physically owning it. This means you don't need any hardware and you cannot touch or see the computer.

However, your hosting company allows you to access the rented computer (the virtual private server) via a remote-desktop-connection from your home Windows PC or laptop and to install software, access the Internet, play games- or trade. Just like on your home PC!

Like that, if you rent a virtual private server, you are actually renting a combination of hardware and an operating system. This is provided by a hosting company, which can be located anywhere in the world but you are able to connect to your virtual private server and use it just like as if you had it at home.

The advantages of using a server:

• You are saving money, because you don't need to buy the hardware and the operating system yourself. The hosting company provides both.

• You are also saving money in terms of cost for energy, maintenance and repair.

• Your home computer does not need to run 24h a day and is not constantly blocked by trading applications such as MetaTrader.

• Good providers also secure your data in a RAID-6 (a redundant array of independent disks). The server offer of ForexInnovation in partnership with Globalways AG (a company based in Stuttgart, Germany), offers data saving in a RAID-6! This provides fault tolerance of two drive failures, i.e. the array continues to operate with up to two failed drives- with this you can be totally sure not lose any data!

• A good hosting company will also provide a stable connection to the Internet, with a stability that is many times higher than your broadband Internet at home. There is not just one single broadband connection, but redundant lines, which can compensate the loss of a single line or a single service provider, to prevent a loss of the connection for the customer. The importance of this goes without saying- no connection, no trading.

• Good providers also offer bandwidth and data throughput, which are many times higher than your ordinary private broadband connection. The fastest broadband Internet offer currently available on the German market is DSL 50.000 (VDSL 50.000 Kbit/s). We can provide you a network connection of 1GBit/s (1.000.000 Kbit/s), which means our offer is up to 20x faster ! Especially for high-frequency-trading and scalping it is a must-have.

From our experience, you should take into consideration the following key points:

• What kind of hardware availability and performance can be guaranteed?

Since most users of a server tend to operate in a way, which does not require the full potential of the hardware resources, it is common practice that hosting companies split their hardware resources among different users. In this case a CPU does not exclusively calculate for one user only, but for 5 or 10 or even 20 users…which actually is acceptable for most applications- but is very dangerous for trading.

Most Expert-Advisors do not calculate every 20sec or once every couple of minutes, but each tick! That's why you need the full performance 24h a day!

• At what times are updates being performed?

Companies focused on customers who are trading will not run updates during trading hours! You should always ask for this, because only few hosting companies are ready to offer that service. Quite understandably nobody likes to perform updates on Saturdays and Sundays when (almost) everybody else is enjoying their weekends. Most companies update their systems during the week at night.

• Are the servers located close to the broker?

What's the use of a cheap server located in China or Ireland if my broker is based in Switzerland? Obviously not every Expert Advisor depends on low latency (i.e. low delay) to the broker, however, for many systems and trading strategies a low latency is a big advantage. This is also true for news trading (both manual and automatic) for which the lowest latency possible plays a decisive role.

• What bandwidth does the network provide?

Of course, with one MetaTrader (MT) and two or three charts, the bandwidth does not have an influence. However, if you are running multiple MTs at the same time or if you are using other trading platforms parallelly, a high bandwidth is imperative.

On our servers we are currently running 8 MetaTrader with 8 charts each in parallel. They are all operating tick by tick and are at the same time recording spreads and price movements! This would not work without the corresponding hardware performance and bandwidth.

Conclusion:

For advanced system traders using a server is almost without alternative. The constant availability of the Internet, combined with a high bandwidth and multiple data protection by means of RAID, as well as many other features a server can offer, enables professional trading.

Attention: as so often in life, the old maxim: "buy cheap, buy twice" also applies to servers! Have a close look at what your hosting company offers you and check thoroughly if all requirements for successful trading are met.