Metatrader5 Review
Public testing of the new MT5 platform commenced on October 12th, 2009.
MetaTrader5 is the keenly anticipated next generation of the hugely successful MetaTrader4 dealing platform. MT5 is not just an upgrade to MT4. It has been completely rebuilt from scratch.
Here are the claimed features of Metatrader 5.
- Three chart-types, 21 timeframes and over 70 analytical tools.
- 5 order types and 4 execution modes available for trading.
- Implements virtually any trading strategies.
- Sophisticated inbuilt reports on all trading activities.
- Built-in indicators and graphical objects allows quicker analysis of quotes and trade decision-making.
- Hi-performance and excellent speed MQL5 development environment with new IntellySence system and more complicated technique tester.
As most of you will 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 system of choice for almost all forex robots 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 result, existing MT4 custom indicators and EAs ( .mq4 and .ex4 files ) will not work with MT5 platform.
You might be thinking that any new investment in MT4 custom indicators, scripts and androids is wasted. That is definitely not correct. MT5 is probably going to be in beta for a minimum of six more months. The current Mt5 beta doesn’t even include a strategy testing function. So it could be as long a year before any heavy MT5 androids become available.
Even when MT5 has matured into a stable trading platform, the surprisingly preferred MT4, is still going to be supported by brokers for many years to come. If traders demand it, brokers will support it. You may expect many brokers will be supporting both platforms and there’s 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. Instead of recoding every MT4 indicator and EA for MT5, it is just about 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 OS X.
Once a tool is developed to convert existing Expert counsellors and indictors from MT4 to MT5, then the uptake of the MT5 platform will occur more quickly.
Here is the official announcement about MQ4 and MQ5 compatibility:
‘From the beginning of Metatrader 5 development we thought that we will be able to save the compatibility. And we announced about it many times. But the numerous traders/developers requests made us change our mind. We’ve understood that just can not make a new language compatible. At the same time we have made MQL5 stronger and in this way 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. Sadly, these 2 aims can’t be found at the same time.’ Interview with Metrader5 lead developer
The complaint frequently heard about MT4 is that this was built by programmers not traders. Actually it was built with a focus on the front end and’client side’ rather than the brokers back office side. The platform itself developed from a price and info 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 acceptance of the New NFA Rules.
Some may feel that the NFA controlled forex 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 whole core of position handling. From this time on MT5 traders will be able 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 2 different in time orders on the same currency pair. Buying and Selling the same pair ( hedging method ) 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 2 lots 1.3500, will be seen on Metatrader five account as one position’Long GBP/USD three lots’.
The first order to shut is always the order that was initiated first, so it’ll 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 controlled broker then MT5 doesn’t look a really tasty prospect.
However there will be other instruments and charts accessible beyond currency exchange. Like futures ( cfd-versions ) along with lots of option classes. Lots of chances for real-world hedging, ( i.e. Where the two instruments aren’t matching ) and for trading styles that are currently impossible. Like purchasing options on signals, instead of just going long or short the currency pair. Or creating foreign exchange grids with options.
Some traders have asserted that FIFO ( first order in first order out ) stops counter trend trading or engaging in a quick scalp in the opposite direction when you already have an open position. It does not have effects on your net position but it affects the way you may manage your trades.
Correlation strategies are also an obvious alternative way to hedge. Hedging a position can be achieved by taking position in more than one correlated currency pair. And in MT5 this could be expanded to currency exchange options and their underlying currencies or foreign 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 has to be well understood.
For more on currency correlation and how to use it on your trading methodology see Correlation Trading system
You can read more on the Correlation Code system at Correlation Code