Co-Location

Co-location means renting server space inside, or physically beside, the data centre that hosts a broker's or exchange's matching engine, so that orders travel the shortest possible distance. Signals move at a finite speed and every network hop adds delay, so sitting metres rather than continents away can cut round-trip latency from tens of milliseconds to a fraction of one, which matters for high-frequency and other latency-sensitive automated strategies. Retail traders rarely co-locate directly; the practical equivalent is a VPS hosted in the same data centre region as the broker's trade server, which trims delay and keeps an Expert Advisor running when the home computer is switched off.