We at Falcon Trading Systems believe that safety and security are extremely important while trading and using our systems. Virtual Private Networks (VPNs) can help keep you safe while sending orders through your brokerage via the internet. This article will discuss the advantages and disadvantages of using a VPN and provide key knowledge to help you make an informed decision on using a VPN with your computer. First, we will need to discuss what a VPN is and how different internet protocols work.
A VPN is a private network that allows you to connect to the internet through an encrypted connection. This means that your data is sent through a secure tunnel that cannot be intercepted by anyone else in between you and the VPN server. VPNs were originally used when you wanted to connect to your office from home securely or if you wanted to connect offices. For example, let’s say you have an office on the east and west coast. If you want to access documents from both locations. You may want to use a VPN so that both coasts act like they are on the same network and can share files and transfer data seamlessly between the two locations. VPNs are commonly used today to allow you to create a secure connection to another server and then connect to the internet through that server. [Keep in mind that you are now trusting the server you are connecting with not to log your information or answer any subpoenas they might get about your online activity.]
Second, let's go over the two most basic internet protocols: HTTP and HTTPS. The Hypertext Transfer Protocol has two versions: unencrypted and encrypted, and we'll start with the former when you send a request over HTTP on the internet, your request is sent in plaintext for all to see. This opens you up to what is known as a man-in-the-middle attack because someone between you and the server of the HTTP protocol can read your information as it travels across the internet and could potentially modify your session or pretend to be you online, which can be rather than scary.
Hypertext Transfer Protocol Secure (HTTPS) is HTTP's secure cousin. This protocol acts like a VPN, creating a secure encrypted tunnel between you and the web server. This eliminates a lot of attack vectors as attackers can't see what is going on from point to point. In 2017 Google started requiring HTTPS protocols on websites that request any information from the end user, so most websites you visit these days are based on the HTTPS protocol. Whenever you see a little lock icon in your browser's address bar, you're on an encrypted connection using the newer and more secure protocol. All trading platforms use this same technology to encrypt your login credentials and the data transmitted to and from their servers.
Today, almost all online traffic is secure because it uses the HTTPS protocol, and your trading platforms are protected as they use the same technology, let's talk about the advantages and disadvantages of using a VPN.
Some advantages include creating anonymity and making it more difficult for the advertising platforms to connect your browsing information to your IP address. It also allows you to act like you are in another country and mask your IP address. We have a few traders that live in South America, and they use a VPN to connect to the United States so that their Trading platform will allow them to trade. It also encrypts your connections online, reducing the chance that someone in between the server and you with a decryption key could get your data.
Some disadvantages of VPNs are that they are slow and offer only a slight security enhancement. When you are trading, you rarely want to use a VPN as it will significantly slow your connection between you and your broker. Also, VPNs don't offer that much more protection than HTTPS sites as it only encrypts the connection between you and the VPN. If you are on an HTTP site, your information is sent as plaintext for the last mile to the web server. Also, if an attacker has access to the HTTPS server or has the decryption key for that server and is sitting in the last mile, your information is still just as vulnerable to attack. Advertising platforms also have many more ways to identify you online. If you are logged into any accounts, they can use that. Also, did you know your mouse movement is like a fingerprint, and they can also use that to identify you online? You need to pick a good VPN company that doesn't log your information, as the VPN company could sell your information to Google or other data brokers.
Falcon's general recommendation is not to use a VPN while you are trading, as it doesn't offer enough security to offset the cost in slippage that you will accrue while using it with your trading platform. That is fine if you want to use a VPN outside of trading. You will limit some attack vectors, but remember that it can only do so much. You must exercise caution when online and only give information out sparingly.