do faster computers make a difference with slippage?

been a couple months since i started this thread, since then i have been using a vps which is based in new york. my broker speed is around 1ms now opposed to my previous 350ms without a vps. i am now looking into getting a dedicated server which will even increase the speed which hence will reduce my slippage. since having the vps i have noticed a slight reduce in slippage from the faster execution speed

fxpiprunner good to hear about the Vps. It sounds like your brokers server is in New York too. 1ms is an amazing speed. But just to let you know there is not much better it could get with a VPS. You can get a little less than 1ms but not much more. If you really need that faster execution and can afford you should consider FixApi connection. It is far more stable and faster but quite more expensive.

thanks for the feedback, I will check it out! Is a fix API connection similar to a dedicated server? I did some research and spoke to my vps provider and they said the next step up is a dedicated line but obviously that comes at a cost

fix Api is a protocol where a programmer establishes a connection for you directly with the Liquitity Provider and is quite expensive and hard to do http://bostontechnologies.com/blog/what-is-fix-api . The difference with VPS and a dedicated Server is not that big. As far as I know it a VPS is the same as dedicated server just the dedicated server is a PC which is just for you (dedicated) and the VPS could have a few clients on the same PC. The most important thing is how close the VPS to the Main server is and if the machine is good and the connection around 1ms you are already doing good. If they want you to pay more for a dedicated server which would be a better machine and you will get again something around 1 ms or just a bit less. I don’t see much of a difference.

It does make a difference but what I think has the most impact is your latency/connection to the server.

Correct I have 5ms using VPS and trading is going really great.

A contemporary PC and a good broad band internet connection has nothing to do with any slippage.

Such a bold claim, such an authority... and so much ignorance on the subject, like 99% other people on this forum.

Let me educate yourself why you might be quite wrong, because I cannot pass such a nonsense without making it straight.

First of all, what is slippage - from user point of view? Quote: "Slippage refers to the difference between the expected price of a trade and the price at which the trade is actually executed.". Source: http://www.investopedia.com/terms/s/slippage.asp

In most common understanding slippage might be caused by:
1. lack of matching order at the expected price - cause by market
2. lets move slightly back in execution chain, next reason: server/infrastructure/internet delay between trade station and execution
3. lets move back in execution chain, next reason: your contemporary PC - to explain in the moment
4. lets move even more back in execution chain, next reason: human physiological limitation, delay between brain triggering execution action and your finger hitting mouse or keyboard

Now lets look closer at your contemporary PC. It might be i7-whatever with 16GB RAM and other fireworks. Then lets take your typical platform, whatever it might MT4, Ninja Trader, cTrader... does not matter. What matters it is a piece of software that runs some quotes, displays them, displays charts and displays, most likely bunch of other indicators. Even better, refreshing all those quotes, charts and indicators will most likely heavily depend on ticks coming in. More ticks coming in, more calculation your software has to do. Meaning more CPU power is required. Unfortunately none of those typical trading software support multi core CPUs. Meaning your piece of software will entirely run on one core, which will try run as fast as it can, but it can only do that much.

Imagine now, that there is no one chart, but couple charts being displayed at the same time and each of them are full of indicators that update them self on each tick. And some of those indicators might be written by amateur trader-programmers, who do not have any idea what optimization word means. Do you think your single CPU core will choke or not? I can tell, in busy time it is very likely to choke.

And here comes the point no. 3 about slippage - when your CPU works so hard to update all the stuff on all charts tick by tik and you hit the sell button on exactly the same piece of software, will a routine responsible to send the order to the server execute immediately or not?

Answer is: it will not execute immediately and that will cause slippage as defined above. The reason here is that either not adequate PC or adequate PC, but full of CPU-calculation-heavy stuff.

For the same reason VPN will not help if you fill it with similar stuff as describe above.

I hope this clarifies for you and other newbies why a contemporary PC can cause slippage. You can work out yourself how to avoid it now.

If you guys think improving slippage to couple milliseconds, because you use VPN will help your EA win this game, think again. How can you win on HFT against funds and institution that invest hundred of millions of dollars in infrastructure to shave of couple nanoseconds. By the time your algo on VPN blinks, those funds will execute hundreds of orders before you on nanoseconds timeframe.

"All we can tell any remaining retail traders who still think they have an edge against microscalping that will now run practically constantly - good luck.

http://www.zerohedge.com/news/welcom...second-markets

Better take money you spend on VPN and invest in nice spa, so you approach to your speculating in super relaxed manner. That will help you more than VPN.

Interesting indeed, you made your point but...I have never had any slippage since mopre than 3 years or so with my brokers. I only speak from my experience.

Regards!

The statement you made before was generalized, therefor not factual, regardless if you personally have experienced slippage or not.

I observed the effect mentioned above number of times. On very capable machine(s), running quite a few charts at the same time. It maybe not obvious with couple charts in normal busy time, but it can become very pronounced in very vivid market, like minute or so after unexpected news when market has to reprice fast and so many ticks in fast progression. Thats is why I use 2-3 machines at the same time. The main one, quite capable, is used for execution - open and close scalping positions, runs only basic charts and never goes above 20% of CPU usage, no matter what market conditions. For the same reason I write my own indicators in optimized way so they dont execute on every tick and dont execute all at the same time - only when is necessary or convenient to do so.

But, if I want I dont have any problem to choke even the best contemporary PC (Windows, Linux, OSx, whatever) to a point when sending any platform order to a broker will literary takes seconds. Not a problem at all, no matter how fast PC or virtual machine is. Hence hardware used for trading matter as much as other aspects, when come to slippage - from moment your brain thinks "time to press sell button" to moment that order is matched by your broker's liquidity provider.

Great summary on the topic kpclick , more people should read it Putting it all together as we are using electronic trading platforms , we are depending on the machines and the internet connection.