Why is it essential for a trader to know the importance of latency in the terms of Forex Trading? To put it plainly, high latency costs traders less money while low latency earns you money as you would have predicted and expected, while ultra-low latency trading avoids high slippage and off-quotes.
Research suggests, from video games or movies, that humans can only perceive latency of 13ms or even more. Yet in trading, it will take considerable time to gauge changing market data and conditions while acknowledging and making decisions. See here to know how to achieve low latency Forex trading:
Use Forex Virtual Private Servers (VPS)
The distance can influence the efficiency of the trading mechanism of the trader and its broker. Forex VPS minimizes data lag by hosting an expert advisor. As long as a VPS keeps your as close as can be to the servers of brokers then it is a great Forex VPS plan to stick with.
Top brokers suggest connections to a VPS with the same system as theirs. Although choosing this setup is not cheap, yet escapes the high latent disadvantages.
Invest in a Workstation Designed for Trading
Assigning a space or hub within your room or area can keep your latency in check. Also, upgrading the devices you use for trading can reduce the latency in trading. It is comfortable and convenient to carry around phones and tablets.
But these devices may not be able to maximize the trading platform you need. The device you need must be capable of data transmission and should be designed to help fast-paced trading.
Keep Quality-wise Hardware
Desktop computers are more qualified and capable of trading. Complete an efficient trading setup having at least 500GB of hard drive memory, random access memory of at least 8GB, and a quad-core, 2.8GHz processor.
Drag in another monitor for a multiple screen advantage to achieve a more efficient trading. Remember to check if you have sufficient power supply and a virus-free operating system which are aspects of reducing latency in your trades.
Network Protocol Design
Trading usually exposes two different protocols, trading and market data. Latency-sensitive trading is heavily affected by network protocol design. Ideally, your trading should be sending an order as fast as possible or in real-time with the market data so that your algorithms can react at the same time.
Exchange Colocation and Network Stack
Utilizing a masterpiece of the network stack is an important way of decreasing latency. Market vendors offer high-performing network equipment adapted to provide DMA capabilities. DMA receives data from the wire and immediately transfers it into the shared memory to be processed as it is.
Forex Trading ABC’s
Learning to aim for low latency by understanding the importance of TradingFX virtual private server keeps you on a better trail for your trading ventures. Realize that every aspect of trading can be a loss or gain with every second. Make it a goal to trade with consistently low latency.