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Should You Speculate on FOREX? No. But If You Must and Need a VPS...

FOREX InvestingFOREX – short for foreign exchange – is the business of speculating on the relative value of the world’s currencies.

For example, as of the time of this article, the US dollar is worth 144.92 Japanese yen.  If you had a crystal ball that would tell you if the dollar or yen is going to appreciate or depreciate against the other, you could buy one currency and later profit handsomely.  You could even use leverage to amplify your earnings.  Of course, you need to make sure your crystal ball really is clear and not cloudy.to

Note that this is not investing but rather speculating.  Investing is putting money into productive assets such as stocks, bonds, small businesses, mines, rentable real estate, and other things that actually produce money over time.  On the other hand, putting money into gold coins, comic books, crypto currency, and fine art is speculating.  By themselves, these things don’t produce money – rather, you’re betting that someone down the line will pay more than you paid.  This is known as the “greater fool” theory.

Many organizations utilize the FOREX markets for reasons other than speculation.  Think of a large multi-national company that trades in many countries and in many currencies.  It may need to constantly exchange currencies or hedge its bets so that its earnings aren’t negatively affected by changes in exchanges rates.

That’s why the markets exist.  But as with other markets, some people buy and sell purely to make money on the trading without any true need for the underlying product.

Get Rich Fast

Are there people who’ve made untold riches playing FOREX?  Sure.  There are also people who win lotteries.

The odds are stacked against the trader.  Here are some hurdles:

  • You’re competing in a market alongside the most sophisticated financial institutions on the planet.  Not some of them; all of them.  They have fleets of pros who’ve trained at the best universities and racked up decades of trading experience, backed by research departments and massive computer networks feeding them information, not to mention personal and insider connections to decision makers.  In many cases, these players are the decision-makers.  Against this, you and your laptop are a bit quixotic.
  • And the big boys don’t even play honestly.
  • Governments have no concept of protecting traders when they make decisions.  A fantastic example is the Swiss Franc in 2011.  In a single moment, one of the most stable currencies became unhinged, stunning currency traders.  These sort of black swan events can wipe out a small player in an instant.
  • And when will the next one come?  When will the next 9/11 or Lehman Brothers happen?  You might make hay for a time, only to see it wiped out in a moment.  The inability to foresee the future is crippling.  Sure, these things can happen with equity markets or bond markets or real estate, but because the underlying assets are productive and there are abundant diversification strategies, they’re generally not as devastating.

But I’m The Exception

Well, good luck and Godspeed, brave trader.  If you want to play in this world, you’re going to setup shop with something like Metatrader.

The good news is that this platform now supports Linux (via Wine).  Wine is sometimes hit-or-miss with apps, but this one is from a vendor saying they officially support it.  It also runs on Windows and macOS.

You can run it at home, but speed is everything in the FOREX world, and you’ll quickly discover that network latency is your bottleneck.  So the next step is to put your Metatrader terminal in a datacenter on a VPS or dedicated server.

Unfortunately, the app wants a lot of CPU.  A lot of generic VPS providers aren’t going to like your VM chewing 100% CPU 24×7.  You can go with a dedicated server, but the same CPU that runs your little sister’s Minecraft server is not what you want here – you need high-frequency CPU and a lot of it.

You can save some money by going with Linux, assuming you know how to sysadmin a Linux VPS.

There are some providers who specialize in FOREX, but don’t expect the $5 price point or $10/year.  Here are a couple we’ve run across:

  • GreenCloudVPS offers FOREX VPS services starting at $16/month.  That’s for a 2GB VPS, which can be a bit painful for Windows so you may want a bigger system.
  • ForexVPS service starts at $32/month.  You can save by going annual and they have frequent promotions.  They also have a free FOREX VPS plan, which requires minimum trading volumes.

Any others you’d recommend?  Let us know in the comments below!




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