Cutting My VPS Bill While Getting Closer to CME: My 3-Machine Setup for 200+ Futures Strategies
Important: There is no guarantee that ATS strategies will have the same performance in the future. I use backtests and forward tests to compare historical strategy performance. Backtests are based on historical data, not real-time data so the results shared are hypothetical, not real. Forward tests are based on live data, however, they use a simulated account. Any success I have with live trading is untypical. Trading futures is extremely risky. You should only use risk capital to fund live futures accounts and if you do trade live, be prepared to lose your entire account. There are no guarantees that any performance you see here will continue in the future. I recommend using ATS strategies in simulated trading until you/we find the holy grail of trading strategy. This is strictly for learning purposes.
I’m on a quest for the holy grail of automated trading. Questions? Check the FAQs or feel free to reach out directly:
AutomatedTradingStrategies@protonmail.com.
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Two years ago, I wrote a post about setting up your own forward test. A critical part of that setup is the VPS (Virtual Private Server). I’ve talked to many of you about this, but I’ve never tackled the decision-making process head-on.
Why now?
There have been a number of innovations made in the VPS space since I wrote that first post. Some features weren’t even available to retail traders. Over the years, I’ve also learned more about how the platform and data provider you use can influence the decision of which VPS service works best for you. Since I’m finalizing my own migration from 4 machines down to 3 across different vendors (each vendor for a different advantage), I thought I’d share the final planned set-up with you.
Ultimately, the vendor you decide to go with depends on your trading system—what instruments you trade, how many instruments you trade, the # of strategies you have enabled. If you only trade longer term/overnight trades, then all you may need is a low budget VPS with locations next to the exchange of the instruments you trade. But for those of us that like to dabble in high frequency and/or order flow trading, the decision becomes part of your risk management strategy, especially if you’re trading more than one instrument. Whatever the case, there are many variables that go into the decision process, but only four variables that really matter.
I don’t proclaim to have the best answer, but this where I’m at after two years of using various vendors. I’d love to hear your thoughts/suggestions in the comments or via email.
Let’s get into it…
The Only Four Variables That Matter For VPS Vendor Selection
If you’re running automated strategies on CME futures, I recommend getting a VPS. A VPS is a 24/7 remote computer in a professional data center that ensures your strategies run without interruption.
I know some of you don’t feel this step is necessary in the forward test set-up process, but what I have found is that it is very difficult to create an environment that you can count on to run 24/7. I can’t tell you how many times I’ve created a portfolio of strategies only to have some type of system issue that requires me to rebuild the portfolio. It is a truly humbling experience, especially when it happens again (and again). The virtual server mitigates this risk. It’s like having your very own back office.
Your laptop is fine if you’re starting out and want to get a feel for things, but sooner or later power failures, reboots, and issues with residential internet uptime will cost you both time and money. The biggest issue for me is that it hurt the credibility of trade data, which by extension, undermines my analysis.
Great, so you’re thinking about getting a VPS, now what?
Choosing the right VPS isn’t about finding the cheapest provider. It’s about understanding four critical variables and how they interact for your specific trading approach.
When selecting a VPS for automated strategies, these are the only variables that really matter: