How Does VPS Work in Forex Trading?

Forex VPS is a service that helps traders to deploy their expert advisors on a dedicated server that will be running 24/7 without interruptions, independently from the trader’s own computer and without any efforts from the trader’s side. VPS hosting companies usually charge from $10 to $99 per month (depending on the server’s quality and the company’s greed). If you have a working MT4 EA, it’s always better to install it on a VPS, because when an EA is running from your home or office PC there is always a chance for some unforeseeable problems (like internet disconnects, power outages, system errors, etc.)
But how does VPS work in trading? What does VPS serve for? The general scheme of how the VPS is used in trading can be seen below:

All three entities — trader’s PC, VPS with EAs and broker’s MT4 server — are connected to the internet. Trader has still a choice to control the VPS and upload new EAs to it and also to control and monitor its trading account with a Forex broker. Fortunately, none of these actions require a 24/7 uptime from the trader’s PC or connection. EAs installed on VPS are sending orders to the MT4 server 100% autonomously — the actual trading requires a 24/7 uptime and it’s provided by the VPS.
It can be seen clearer by looking at the case when the trader runs an expert advisor on his own PC and thus is required to always maintain a persistent connection to the MT4 server:

The difference is seen when the VPS is used to host the expert advisors. Now trader rarely needs a connection to the VPS (only when some adjustments to the EAs should be made), while the VPS remains always connected to MT4 server and is sending trading orders directly to it:

I hope that now it will be easier for some traders to understand why it’s recommended to opt for a VPS hosting for their EAs when they can afford it. I’ve used “MT4” in the text and in the images but, of course, it can be “MT5” or any other trading platform that supports automated trading using expert advisors (or Forex robots).
Update 2012-10-02: We have prepared a nice infographic explaining the ins and outs of Forex VPS.

If you have any questions or comments regarding the usage of VPS in Forex trading, please, feel free to reply using the form below.

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