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

MetaTrader5 is the keenly anticipated next generation of the hugely successful MetaTrader4 dealing platform. MT5 isn’t just an upgrade to MT4. It has been fully rebuilt from scratch.

Here are the claimed features of Metatrader 5.

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

As most of you may know, Metatrader four ( MT4 ) is the most widely used ‘off the shelf’ platform in the forex and CFD markets. It is anticipated 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 . In order 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 ) won’t work with MT5 platform.

You could be thinking that any new investment in MT4 custom indicators, scripts and bots is wasted. That’s certainly not true. MT5 is likely to be in beta for no less than six 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 robots 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 zip 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 shape 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 within 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 announcement about MQ4 and MQ5 compatibility:

‘From the start of Metatrader 5 development we presumed that we’re going to be able to save the compatibility. And we said about it many times. But the many 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 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. Unfortunately, these 2 aims can’t be contacted at the same time.’ Interview with Metrader5 lead developer

The complaint often heard about MT4 is that it was built by programmers not traders. Certainly 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 information delivery terminal that became very popular with traders. Users then started to ask whether trading functions could 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 that the NFA controlled foreign 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 is 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 business standard in summer 2009.

Hedging at about that 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 methodology ) 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 two 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 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 very engaging prospect.

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

Some traders have claimed that FIFO ( first order in first order out ) prevents counter trend trading or engaging in a fast scalp in the other way when you already have an open position. It doesn’t affect your net position but it does affect the way you may manage your trades.

Correlation techniques are also a noticeable alternative way to hedge. Hedging a position can be accomplished by taking position in more than one interrelated currency pair. And in MT5 this is going to 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 correlations and how to apply it to your trading system, see Correlation Trading system

You can see more about the Correlation Code platform here Correlation Code Platform