MT5 Review

Public testing of the new MT5 platform began on October 12th, 2009.

MetaTrader5 is the long awaited next generation of the hugely successful MetaTrader4 trading platform. MT5 is not just an upgrade to MT4. It has been fully rebuilt from scratch.

Here are the claimed features of Metatrader 5.

• 3 chart-types, twenty-one timeframes and over 70 analytical tools.
• Five order types and 4 execution modes available for trading.
• Implements almost any trading methods.
• Sophisticated in-built reports on all trading activities.
• Built-in indicators and graphical objects permits quicker analysis of quotes and trade decision-making.
• High performance and excellent speed MQL5 development environment with new IntellySence system and more advanced strategy tester.

As most of you’ll know, Metatrader four ( MT4 ) is the most widely used ‘off the shelf’ platform in the currency trading and CFD markets. It is predicted therefore that when MT5 is out of beta, it too will be widely used.

Today MT4 is the trading platform of choice for almost all foreign exchange bots as well as custom indicators and scripts.

Unfortunately, the Metatrader4 language won’t be compatible with MetaTrader 5 . To meet the incorporate the requested features and execution speed, a new object oriented programming language was developed. As a consequence, existing MT4 custom indicators and EAs ( .mq4 and .ex4 files ) won’t work with MT5 platform.

You could be thinking that any new investment in MT4 custom indicators, scripts and bots is wasted. That’s certainly not correct. MT5 is likely to be in beta for a minimum of 6 more months. The current Mt5 beta doesn’t even include a method testing function. So it may be as long a year before any heavy MT5 robots become available.

Even when MT5 has matured into a stable trading platform, the incredibly favored MT4, is still going to be supported by brokers for years to come. If traders demand it, brokers will support it. You can expect many brokers will be supporting both platforms and there is zilch to stop you running both MT4 and MT5 clients at the same time.

It is only a matter of time before a MT4/MT5 compatibility is developed. Most likely this can be in the form of a compatibility module or MT4 virtualization plugin for MT5. Instead of recoding every MT4 indicator and EA for MT5, it is almost certain that some clever programmers will code a virtual MT4 plugin platform for MT5. Much like the way you can now run Windows in a virtual machine on a Linux box or Linux inside of OS X.

Once a tool is developed to convert existing Expert aides and indictors from MT4 to MT5, then the uptake of the MT5 platform will happen more quickly.

Here is the official statement about MQ4 and MQ5 compatibility:

‘From the beginning of Metatrader five development we presumed that we’re going to be able to save the compatibility. And we claimed about it many times. But the countless traders/developers requests made us change our mind. We’ve understood that just can’t make a new language compatible. At the same time we have made MQL5 more powerful and in this way we gave you, traders and developers, more abilities – that was our main goal in developing of MQL5 IDE. From one side, new language with the new abilities, and from the other side – MQL4 and MQL5 compatibility. Sadly, these two aims can’t be contacted at the same time.’ Interview with Metrader5 lead developer

The complaint frequently heard about MT4 is that it was built by programmers not traders. Certainly it was built with a spotlight on the front end and’client side’ instead of the brokers back office side. The platform itself developed from a price and information delivery terminal that became extremely popular with traders. Users then started to ask whether trading functions could be built into it. Metaquotes exploited the same architecture and added trading functionality to it, leading some to call MT4 a Frankenstein creation.

No Hedging and Compliance With the New NFA Rules.

Some may feel that the NFA regulated currency exchange brokers are driving the MT5 development. Others are saying the MT5 position/order management is to the advantage of the brokers not the traders. Afterall, it’s the brokers who pay for the Metatrader platform.

To meet Forex industry standards, MT5 changes the whole core of position handling. From this time on MT5 traders will be in a position to keep only one position of any single trading instrument/currency pair. This reflection of orders aligns with the new FIFO ( first-in, first-out ) rule implemented by NFA as a sector standard in summer 2009.

Hedging at this point is eliminated and so is the separate management of two different in time orders on the same currency pair. Buying and Selling the same pair ( hedging strategy ) will result in nil positions being open.

For example : 9:00am Long GBP/USD 1 lot 1.3000, and later added 12:00pm Long GBP/USD two lots 1.3500, will be seen on Metatrader 5 account as one position’Long GBP/USD 3 lots’.

The first order to shut is always the order that was initiated first, so it will always be the 8:00am Long position to close in our example above.

Is the FIFO and No Hedging a Show Stopper?

No individual orders listed, NO Hedging, and non-compatible with anything MT4. Is this a step BACKWARDS?

If you like the way MT4 works for you now and or have made the move to a non NFA regulated broker then MT5 doesn’t look an extremely tasty prospect.

However there’ll be other instruments and charts accessible beyond forex. Like futures ( cfd-versions ) with lots of option classes. Lots of opportunities for real-world hedging, ( i.e. Where the 2 instruments are not identical ) and for trading styles that are currently most unlikely. Like purchasing options on signals, instead of just going long or short the currency pair. Or making currency exchange grids with options.

Some traders have claimed that FIFO ( first order in first order out ) impedes counter trend trading or engaging in a fast scalp in the other way when you already have an open position. It does not affect your net position but it affects the way you have to manage your trades.

Correlation techniques are also an obvious alternative way to hedge. Hedging a position can be accomplished by taking position in more than one correlated currency pair. And in MT5 this could be extended to foreign exchange options and their underlying currencies or currency exchange futures and their own options. In fact if you are trading on more than one currency pair then currency correlations and their impact leverage and risk is something that must be well understood.

For more on currency correlation and how to apply it to your trading technique see Correlation Trading system

You can read more on the Correlation Code platform here the Correlation Code

Filed under: Gomega GBP JPY AutoTrader

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