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

MetaTrader5 is the keenly anticipated new generation of the hugely successful MetaTrader4 trading system. MT5 isn’t just an upgrade to MT4. It has been fully reconstructed 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 almost any trading techniques.
• Sophisticated 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 technique tester.

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

Today MT4 is the trading platform of choice for just about all foreign exchange robots 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’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 could be as long a year before any heavy MT5 robots become available.

Even when MT5 has matured into a stable trading system, 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 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 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 almost 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 of OS X.

Once a tool is developed to convert existing Expert Advisors 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 thought that we’ll be able to save the compatibility. And we announced about it many times. But the countless 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 more powerful and in this manner 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 found at the same time.’ Interview with Metrader5 lead developer

The complaint frequently heard about MT4 is that it was built by programmers not traders. Definitely it was assembled 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 information delivery terminal that became very popular with traders. Users then started to ask whether trading functions may be built into it. Metaquotes used 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 the NFA regulated 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 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 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 zero positions being open.

For example : 9:00am Long GBP/USD one 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 three 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 engaging prospect.

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

Some traders have asserted that FIFO ( first order in first order out ) impedes counter trend trading or engaging in a quick scalp in the other way when you already have an open position. It does not affect your net position but it does affect the way you have to 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. 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 how to apply it to your trading technique see Correlation Trading system

For more on the Correlation Code system at Correlation Code System