MT5 Review

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

MetaTrader5 is the long awaited new generation of the hugely successful MetaTrader4 trading system. MT5 isn’t just an upgrade to MT4. It has been absolutely rebuilt from scratch.

Here are the claimed features of Metatrader 5.

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

As most of you’ll know, Metatrader 4 ( MT4 ) is the most generally used ‘off the shelf’ platform in the foreign exchange and CFD markets. It is expected 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 will not be compatible with MetaTrader 5 . To meet the incorporate the requested features and execution speed, a new object orientated programming language was developed. As a result, existing MT4 custom indicators and EAs ( .mq4 and .ex4 files ) will not work with MT5 platform.

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

Even when MT5 has matured into a stable dealing platform, the surprisingly favored MT4, is still going to be supported by brokers for years to come. If traders demand it, brokers will support it. You may expect many brokers will be supporting both platforms and there is nothing 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 may be in the form of a compatibility module or MT4 virtualization plugin for MT5. Rather than 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 start of Metatrader five development we presumed that we’re going to be able to save the compatibility. And we said 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 stronger and in this fashion we gave you, traders and developers, more capabilities - 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. Unfortunately, these 2 aims can’t be contacted at the same time.’ Interview with Metrader5 lead developer

The complaint regularly heard about MT4 is that it was built by programmers not traders. Definitely 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 very popular with traders. Users then started to ask whether trading functions may 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 observance of the New NFA Rules.

Some may feel that the NFA controlled currency exchange brokers are driving the MT5 development. Others say 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 entire 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 an industry standard in summer 2009.

Hedging at that 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 method ) will result in 0 positions being open.

For example : 9:00am Long GBP/USD one lot 1.3000, and later added 12:00pm Long GBP/USD 2 lots 1.3500, will be seen on Metatrader five 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 INCOMPATIBLE 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 a really attractive prospect.

However there will be other instruments and charts accessible beyond currency exchange. Like futures ( cfd-versions ) along with heaps of option classes. Tons of chances for real-world hedging, ( i.e. Where the 2 instruments are not identical ) and for trading styles that are at present most unlikely. Such as purchasing options on signals, instead of just going long or short the currency pair. Or making forex grids with options.

Some traders have said that FIFO ( first order in first order out ) stops counter trend trading or engaging in a quick scalp in the other way when you already have an open position. It doesn’t have effects on your net position but it affects the way you have to manage your trades.

Correlation secrets are also a clear alternative way to hedge. Hedging a position can be achieved by taking position in more than one interrelated currency pair. And in MT5 this could be extended to forex options and their underlying currencies or foreign exchange futures and their own options. Actually if you’re trading on more than one currency pair then currency correlations and their impact leverage and risk is something that has to be well understood.

For more on currency correlation and the way to use it on your trading system, see Correlation Trading system

For more on the Correlation Code platform here Correlation Code Platform

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