Do traders need a VPN?
For checking on an account, yes. For trading, no — and this is the part worth being firm about. A VPN routes your connection through an extra server and encrypts everything on the way, and both of those cost you time. That is fine when you are looking at open positions from a hotel room. It is not fine when you are sending an order, because the delay lands exactly where it is most expensive. Use a VPN to check. Never trade through one.
Key takeaways
- Checking positions on a VPN is sensible. On hotel, airport or coffee shop Wi-Fi, it stops the local network reading what you are sending.
- Placing orders through one is not. Every packet takes a detour through the VPN server and gets encrypted and decrypted on the way. You are adding delay to the one action where delay costs money.
- The further away the VPN server, the worse it gets. A server in another country can add a lot on its own, before the encryption work is counted.
- If you must place an order while travelling, drop the VPN first, or call your broker. Being late to an exit costs more than the privacy is worth for those thirty seconds.
- Treat the privacy claims with suspicion. "No logs" is a marketing line, not an audited fact, and several providers advertising it have handed over user records when required.
- A VPN provider sees everything your internet provider used to see. You are choosing who to trust, not removing the need to trust anyone.
- Free services are the worst of it. Running the infrastructure costs real money, so if you are not paying, look hard at how they are funded.
- What a VPN genuinely does well: it stops the network you are sitting on from reading your traffic. That is a real benefit and it is narrower than the advertising suggests.
- Some countries restrict or ban VPN use, China, the UAE, Russia, Turkey and Iran among them. Check before travelling with a trading laptop.
What is a VPN?
The purpose of a Virtual Private Network is to keep information about your computer and your online activity safe from others in the online world. At the most basic level, a VPN routes your data through an extra server to shield you from exposing your IP address and other information to the Internet directly. And, more importantly, it encrypts all your data as it's leaving your computer.VPNs: Under the Hood
In order to understand how a VPN works, let’s first look at how communication channels work without a VPN. When you connect to a website from your trading computer, a channel is established between your trading computer and the website. All information is exchanged through this two-way channel. The problem is, this channel is visible to everyone on the Internet. So anyone with malicious intent can look at your data. Modern websites use SSL (Secure Sockets Layer) to keep data hidden. (These are websites whose addresses begin with HTTPS). But, if the site only uses HTTP (indicating no SSL certificate is available), then anyone can see the raw data you are sending. However, in the case of HTTPS, even if cyber hackers cannot decipher the data itself, they can still observe the time and location of your connections. If you are connecting to sensitive websites like banks or trading applications, this time and location information can be used to infer various things about your usage patterns. VPN solves this problem through first connecting you to a VPN server via an app. The app encrypts all your data before it even leaves your computer (i.e., before it gets to your Internet Service Provider – or to Starbucks' ISP). From there, the VPN server connects to the web on your behalf. As a result, hackers or cybercriminals can no longer (easily) identify you as the traffic origin. Plus the VPN encryption provides better security for your sensitive data. Even if they manage to look at what you're sending, they only see the encrypted version, and not your actual data.VPNs: Anonymity and Legality
VPN does NOT provide full anonymity. VPN service providers still can log your information. VPN providers have to comply with local laws. Because it is a relatively new technology, the laws aren’t clear cut. Always assume if government agencies want to access your VPN data, they might be able to do it through legal channels. But VPN still provides a higher level of security. For example, without a VPN, when you connect to a website, the ISP can see the connections. They can monitor your activity and even slow down your speed based on what website you are connecting to. A VPN encrypts both the data and the destination. So your information is more secure from the prying eyes of ISPs. Note that some countries (e.g., China, United Arab Emirates, Russia, Turkey, and Iran) don't allow VPN use. So when traveling with your trading laptop, make sure you check the local laws of your destination countries before using VPN.VPN Services: Free vs Paid
VPN requires expensive infrastructure setups. So if a VPN service is free, make sure the provider is not selling your information to third parties or serving you targeted advertisements. Look at the fine print before using any free services. Most paid services have a vested interest in keeping your data secure and not using it for any other purpose. Their reputation depends on it. Nevertheless, always read the fine print to make sure there aren't any hidden surprises. Paid VPN services are quite affordable. Generally, you can expect to pay single-digit monthly subscription fees, with good discounts for annual subscriptions.Adding a VPN to Your Trading Computer
VPN services are quite easy to use. Once you subscribe to a particular service, you’ll need to download and install their app. Launch the VPN app before you open any web browser or email service. The app will establish a connection with the VPN server. At that point, you can browse the web or check emails from your trading computer securely.The Latency Problem
Here is the part most VPN articles leave out, and it is the part that matters most to a trader. A VPN does not send your data straight to your broker. It sends it to the VPN company's server first, which decrypts it, passes it on, waits for the reply, encrypts that, and sends it back to you. Your order takes a detour on the way out and another on the way back, and every step is real time on the clock. How much time depends on where that server is. Connect through one in the same city and the cost is modest. Connect through one on another continent — which is easy to do by accident, because many apps pick a server for you — and you have added a round trip across an ocean to every single order. None of that matters when you are reading a chart or looking at your open positions. It matters enormously when you click buy, and it matters most in exactly the conditions where you least want a delay: a fast move, a news release, an exit you need filled now. So use it for what it is good at. Check your account from the hotel on a VPN. Turn it off before you place an order, or wait until you are on a connection you trust. If you cannot do either, call your broker — a phone call is faster than a bad fill.How Private Are VPNs, Really?
VPN marketing has run well ahead of what the technology delivers, and traders should read it sceptically. A VPN does not make you anonymous. It moves the point of trust: instead of your internet provider seeing where you go, the VPN company does. You have not removed the need to trust someone with your traffic, you have only changed who it is — and your internet provider is at least a regulated company you have a contract with. "No logs" is the industry's favourite phrase and it is an assertion, not a guarantee. A number of providers advertising strict no-logging policies have later produced user records when legally compelled. Some are owned by parent companies that are difficult to trace. Free services are the sharpest version of the problem: running servers worldwide is expensive, so if the service is free, it is worth understanding exactly what is paying for it. That is not an argument against using one. It is an argument for being clear about what you are buying. A VPN reliably stops the coffee shop, the hotel and the airport from reading your traffic, and that is genuinely useful. Treat anything beyond that claim as advertising.Conclusion
A VPN is a useful tool with a narrow job. If you travel and want to check your positions from a hotel or an airport without the local network reading your traffic, get one, pay for it, and use it. But do not place trades through it. The latency it adds is small in ordinary use and expensive at the moment of execution, and no amount of privacy is worth a bad fill. Check on a VPN, trade on a connection you trust. And keep the privacy claims in proportion. A VPN stops the network you are sitting on from watching you. It does not make you anonymous, and how private these services really are is a fair question to keep asking. A VPN will not make a slow machine fast, and neither will anything else on this page. Not sure where yours stands? The free benchmark test takes about two minutes.Frequently Asked Questions
Should I trade through a VPN?
No. A VPN routes every packet through an extra server and encrypts it in both directions, which adds delay to the one thing where delay costs you money. It is fine for reading charts or checking open positions, and it is the wrong tool for sending an order. Turn it off before you trade, or wait until you are on a connection you trust.
Is it safe to check my brokerage account on hotel or airport Wi-Fi?
With a VPN, reasonably. That is the situation a VPN is actually built for: on a shared network, other people connected to it can observe your traffic, and a VPN encrypts it before it leaves your laptop. Check your positions that way by all means. Just do not place orders while you are connected through it.
How much latency does a VPN add?
It depends almost entirely on where the VPN server sits. A server in your own city adds a modest amount; one on another continent adds a round trip across an ocean to every request, and many VPN apps choose a server for you without making it obvious. The number matters less than the principle: it is always slower than not using one, and execution is the worst place to spend that time.
Do VPNs really keep you private?
Less than the advertising suggests. A VPN moves the point of trust rather than removing it, because the provider can see the traffic your internet provider used to see. "No logs" is a claim rather than an audited fact, and several providers making it have produced user records when legally compelled. What a VPN does reliably is stop the network you are sitting on from reading your traffic, which is worth having as long as you do not expect more.
Are free VPNs safe to use?
Be careful with them. Running servers around the world costs real money, so a free service is funding it some other way, often by selling user data or serving advertising, which defeats the point. Paid services cost a few dollars a month and at least have a commercial reason to protect their reputation. Read the terms either way.
