Quantum Gomega AutoTrader

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

MetaTrader5 is the long awaited new generation of the hugely successful MetaTrader4 dealing platform. MT5 isn’t just an upgrade to MT4. It’s been fully reconstructed from scratch.

Here are the claimed features of Metatrader 5.

• Three chart-types, 21 timeframes and over 70 analytical tools.
• 5 order types and four execution modes available for trading.
• Implements virtually any trading techniques.
• Advanced in-built reports on all trading activities.
• Built-in indicators and graphical objects allows quicker research of quotes and trade decision making.
• Hi-performance and excellent speed MQL5 development environment with new IntellySence system and more complicated strategy tester.

As most of you’ll know, Metatrader four ( MT4 ) is the most widely used ‘off the shelf’ platform in the forex 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 robots as well as custom indicators and scripts.

Unfortunately, the Metatrader4 language won’t be compatible with MetaTrader 5 . In order 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 could be thinking that any new investment in MT4 custom indicators, scripts and bots is wasted. That is certainly not correct. MT5 is likely 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 dealing platform, the amazingly preferred MT4, is still going to be supported by brokers for several years to come. If traders demand it, brokers will support it. You should 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 can be in the shape of a compatibility module or MT4 virtualization plugin for MT5. Rather than 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. Very similar to 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 aides 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 start of Metatrader 5 development we presumed that we will be able to save the compatibility. And we said about it many times. But the numerous traders/developers requests made us change our mind. We’ve accepted 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 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. Unfortunately, these two aims can’t be contacted at the same time.’ Interview with Metrader5 lead developer

The complaint regularly heard about MT4 is it was built by programmers not traders. Actually it was built with attention on the front end and’client side’ rather than the brokers back office side. The platform itself evolved from a price and information delivery terminal that became highly regarded 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 observance of the New NFA Rules.

Some may feel 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 whole core of position handling. From now 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 this point is eliminated and so is the separate management of two different in time orders on the same currency pair. Purchasing 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 5 account as one position’Long GBP/USD 3 lots’.

The first order to close 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 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 controlled 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 ) together with tons of option classes. Lots of chances for real-world hedging, ( i.e. Where the 2 instruments aren’t matching ) and for trading styles that are presently impossible. Such as purchasing options on signals, instead of just going long or short the currency pair. Or making foreign exchange grids with options.

Some traders have asserted that FIFO ( first order in first order out ) stops counter trend trading or taking part in a fast scalp in the opposite direction when you already have an open position. It doesn’t affect your net position but it does affect the way you must manage your trades.

Correlation strategies are also a clear alternative way to hedge. Hedging a position can be done by taking position in more than one correlated currency pair. And in MT5 this could be extended to currency 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 has to be well understood.

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

For more on the Correlation Code platform here Correlation Code