With the inception of LLMs at the end of 2022, AI trading systems are no longer foreign to market participants. With the current AI boom, traders are partnering with developers to develop the perfect trading robot with the best win rate. The latency factor is just one of the most ignored factors when using artificial intelligence for market analysis. This is where the VPS systems come in. These machines allow you to host your trading platform close to the data center of forex brokerage, reducing the lag in trade execution.
Understanding Forex VPS
A virtual private server or a VPS is a remote operating system with or without a Graphical User Interface(GUI) that you can access and control using your PC. It has its resources, i.e., RAM, CPU, SSD, Hardisk, etc. The trader installs their trading platform, e.g., MT4 or cTrader, on the server via a remote desktop connection. They then place a trade on the software, which quickly reaches the broker’s data center within ten milliseconds or less in most cases.
Why should you use a Forex VPS to trade with expert advisors?
In addition to reduced latency, here is how a forex VPS may help you while using expert advisors:
- Uptime: Your PC may be prone to internet or power outages. VPS companies ensure that their operating systems are up nearly 99.9% of the time. A good uptime is essential, as any downtime would require you to reload your system and start the EA again in most cases. Some algorithms may even fail to reload correctly if restarted, resulting in a disaster.
- Security: Forex VPS are protected by institutional grade security to ensure no one can access your algorithms. With the data under protection from cyber threats, you can trade with peace of mind.
- Backtest: Traders can use the VPS systems to backtest their trading robots. As backtesting is a compute-intensive process, it can help you avoid putting strain on your personal PC. This may also aid in avoiding electricity costs if the processing system is big.
Traders may also choose to set up their own VPS instead of purchasing one from a company. However, it would still require resource optimization and security checkups. The hassle may not be worth it.
Optimizing Trading Algorithms While Using a Forex VPS
Considering the complexity of your expert advisor, you may want to adjust your VPS’s RAM and processing power. Forex robots that involve arbitrage trading or machine learning can demand huge RAM (up to 128 GB or more) and CPUs (24-core CPUs with boost clocks up to 5 GHz). The system should be connected to a secure network with enough bandwidth to handle communications. Even a 1 ms latency difference may prove detrimental, as AI systems perform calculations billions of times faster than an average human.
The best forex VPS companies cover most major brokerages and list their respective latencies on their site. This may help you observe and choose the right package for your needs. To cope with slight delays in execution, traders can tweak their algorithms through the help of a developer. They may include adjusting settings such as time restrictions(to avoid trading during volatile market hours as slippage is high), spread filters, trade using stop and limit orders etc.
Image 1. An MT4 expert advisor has a time and a spread filter to avoid trading during certain market hours. Appropriate adjustments might be needed for the time filter to work properly, as the time zone of your VPS and the broker can be different.
Troubleshooting Common Issues
Traders may encounter some common issues while using AI systems in their VPS systems. Let us go through them.
Software Crashes
If your software is crashing, you may go through the Windows event manager or the application logs on your trading platform. Failures may occur due to a bug within the code of your expert advisor or insufficient system resources to run the bot. A patch or a software update may help resolve the issue.
Connection Issues
A frequent drop in connection might happen at any moment. Forex VPS companies have a backup internet system in place to address all such issues. If you have coverage, you may use a 5g or a 4g device, as they don’t require a landline connection.
Resource Overload
Upgrading your VPS or local hardware is vital if the resources are on the brink of running out. You can use the resource monitor or the task manager in the case of a Windows operating system or use the activity monitor if you are using an Apple. Load balancers in a cloud-based VPS can also help you scale your hardware resources when the usage is high. This can aid in preventing additional costs that occur when systems are idle and no processing power is needed.
Future Outlook of AI and VPS Systems
As cost-affordable high-performance VPS systems become readily available, they’ll be the primary choice for market participants, even in manual trading. LLM models will slowly start to integrate into the development and improvement of AI systems. Here is what the future may hold further:
- AI-driven threat detection measures and advanced encryption technologies will be implemented to safeguard your VPS and trade routes.
- AI trading platforms will be developed that include built-in VPS servers.
- Real-time communication will be developed between the VPS, trading algorithm and brokerage. This may be done through machine learning, LLM models or REST APIs.
Final thoughts
Trading is a delicate game. Even a single miscalculation or delay can put you among the losers. Make sure that your VPS server is reputable, i.e., has good reviews and the most uptime. The right combination of your VPS and trading bot will help you get an edge over traders and even big institutions. The AI sphere is booming as it’ll capture up to $12.43 billion in market share by 2030, up from $0.86 billion in 2023. As traders become more acquainted with AI systems, they’ll lean on forex VPS services to help them get the most out of their algorithms.