Does low latency actually make a difference in automated trading?
In my opinion, it depends a lot on the type of trading strategy.
For scalping, news trading or very fast systems, latency can clearly make a difference. But for slower strategies, it is usually more about stability, uptime and avoiding problems with your local connection.
Since we do not know your exact setup, the best option is probably to test it yourself for one month. A VPS is usually inexpensive, and your own results with your broker, account and EA will be much more useful than general opinions from other users.
So yes, low latency can help, but whether it really matters depends on your specific trading style.
In my opinion, it depends a lot on the type of trading strategy.
For scalping, news trading or very fast systems, latency can clearly make a difference. But for slower strategies, it is usually more about stability, uptime and avoiding problems with your local connection.
Since we do not know your exact setup, the best option is probably to test it yourself for one month. A VPS is usually inexpensive, and your own results with your broker, account and EA will be much more useful than general opinions from other users.
So yes, low latency can help, but whether it really matters depends on your specific trading style.
i am scalper, my EA opens more than 200 trades a day. so yeah, latency matters for me.
- www.mql5.com
IMHO, latency always matters whether you are scalping, swing trading, or positionally trading─and whether you are manually trading or algorithmically trading. At the end of the day, week, month, or year, who wants to be leaving any money on the table? If your orders are slow to execute, or price is slow to feed, due to connection lag, that is simply not good.
Of course, this assumes that your trade entry logic is based on a statistical edge regarding directional bias. If your entry logic is "sloppy," then it's a 50/50 situation─"delay-slippage" is just as likely to go in your favor as it is to go against you.
Lately I have been looking more into how execution speed affects trading, especially when automation is involved. When I was trading manually, I never really cared about latency. Now that I am testing bots, I am starting to see how even small delays can affect entries and exits.
I keep seeing people talk about running their platform on a VPS closer to their broker to reduce lag. It makes sense, but I am curious how big the difference actually is in real use.
For those already doing this, did switching to a lower latency setup actually improve your results or was it more about consistency and peace of mind?
Latency isn't just a technical metric; it’s a direct cost. In my experience developing EAs, even a 50ms delay can be the difference between hitting your calculated entry and getting filled at a price that eats 10-20% of your projected profit, especially during high volatility.
It’s not just about the strategy's speed (like scalping). It's about 'Execution Certainty.' If the market is moving fast and your ping is high, by the time your order reaches the server, the price has already moved—leading to frequent requotes or heavy slippage.
For anyone running bots, a VPS located close to the broker's server is a baseline requirement, not a luxury. It ensures that your backtest results actually match your live performance. Without low latency, you're essentially adding a 'hidden tax' to every single trade.
For anyone running bots, a VPS located close to the broker's server is a baseline requirement...
That, of course, assumes that you're too far away to run a bot on your local machine or you lack a reliable ISP in your location. Fortunately, I live just outside of NYC and many data centers are even closer to me.
Interestingly, VPS problems are reported more often in this Forum than ISP problems are reported. I recommend following the KISS principle and Murphy's Law including a 1000 Mbps Ethernet connection and a wireless backup if you happen to be near a data center/trade server. This setup has served me well for several decades.
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Lately I have been looking more into how execution speed affects trading, especially when automation is involved. When I was trading manually, I never really cared about latency. Now that I am testing bots, I am starting to see how even small delays can affect entries and exits.
I keep seeing people talk about running their platform on a VPS closer to their broker to reduce lag. It makes sense, but I am curious how big the difference actually is in real use.
For those already doing this, did switching to a lower latency setup actually improve your results or was it more about consistency and peace of mind?