The co-located server is where your order logic resides. For example, this can be an algo, or an installation of charting software for chart trading. From there, your order would typically be routed to your broker. For futures, most brokers have their order servers in Chicago, so having your own remote server in Chicago to minimize the latency between when you submit your order and when the broker receives it could makes sense. When does trading over a server make sense? Automated trading - need a server to always be on and connected, running your bots Poor internet - If your home internet connection or router needs to be restarted, your trading workspace on the server is always connected to your broker and data feed. If you have a local PC or internet problem, instantly switch to trading on mobile without missing the trade setup. Windows Only Trading Software - NinjaTrader, MultiCharts, Sierra Charts, any many others do not have support for mobile apps or tablets. Some have web interfaces, but they lack in features compared to the full feature desktop charting software. A remote server allows you to run Windows Only applications on non Windows devices. Your trading workspace is on the server, enabling trading from Androids, iPhones, Tablets, Mac, other PCs. For example enter a trade on your PC and continue with the same trade on your phone. Optimize order fills and reduce slippage - This one is only for market orders, but the other 3 points are beneficial for limit orders too. The #1 problem with many VPS providers is that remote desktop feels laggy because almost all of them run on underpowered Intel Xeon processors. For automated trading an optimized algo, this could be fine. But for remotely connecting and chart trading over RDP, there is noticeable input lag compared to running the software on your local computer. This is why thousands of users have switched from other VPS providers over to us. Our AMD Ryzen Threadrippers offer 4x the CPU power in a single core over the typical Intel Xeon E5 family that so many other providers use. This means that trading through remote desktop feels just like trading on your local computer, with no lag. For automated trading, we're also <1ms to CQG and all Chicago Brokers. If anyone is curious, send us an email and I can set you up with a test server so that you can compare against other VPS and find out why so many traders have made the switch.
This isn't what you want to hear, but change your trading style. 1) Find a more liquid market where the market order will fill very close to target, or just place limit orders. 2) Adjust your position sizes so that you can have multiple entry and exit points with enough wiggle room to profit, and don't scalp.
Really depends what specific markets you trade? Size of trades? Stops become market orders once triggered. Limit are (in most markets) first come, first serve....Some specific markets have ALGO execution that takes into account the size of the order. Much of the info shared here by colleagues and other traders is excellent but for 99% of the traders in 80% of the markets there will not be a difference for 0.02 second in speed.