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

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

Here are the claimed features of Metatrader 5.

• Three chart-types, twenty-one timeframes and over 70 analytical tools.
• Five order types and four execution modes available for trading.
• Implements virtually any trading strategies.
• 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 outstanding 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 forex and CFD markets. It is predicted therefore that when MT5 is out of beta, it too will be widely used.

Today MT4 is the dealing system of choice for almost all forex EAs as well as custom indicators and scripts.

Unfortunately, the Metatrader4 language will not 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 ) won’t work with MT5 platform.

You might be thinking that any new investment in MT4 custom indicators, scripts and bots is wasted. That’s actually not true. MT5 is probably going to be in beta for a minimum of 6 more months. The existing Mt5 beta doesn’t even include a method testing function. So it might be as long a year before any significant 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 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. 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 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 happen more quickly.

Here is the official statement about MQ4 and MQ5 compatibility:

‘From the start of Metatrader 5 development we believed 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 accepted that just can’t make a new language compatible. At the same time we have made MQL5 stronger 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. Unfortunately, these two aims can’t be reached at the same time.’ Interview with Metrader5 lead developer

The complaint often heard about MT4 is that this was built by programmers not traders. Definitely it was built with a focus on the front end and’client side’ rather than the brokers back office side. The platform itself evolved from a price and data 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 regulated forex 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. Purchasing and Selling the same pair ( hedging methodology ) will end in zero 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 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 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 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 ) with lots of option classes. Tons of chances for real-world hedging, ( i.e. Where the 2 instruments aren’t 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 currency exchange grids with options.

Some traders have asserted that FIFO ( first order in first order out ) impedes counter trend trading or joining in a fast scalp in the wrong 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 secrets are also a noticeable alternative way to hedge. Hedging a position can be done by taking position in more than one correlated currency pair. And in MT5 this is going to be expanded to forex options and their underlying currencies or forex futures and their own options. Actually 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 the way to use it on your trading technique see Correlation Trading system

You can read more about the Correlation Code platform at FX Correlation Code