Forex Income Engine 2.0 Review

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

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

Here are the claimed features of Metatrader 5.

• Three chart-types, 21 timeframes and over 70 analytical tools.
• Five order types and 4 execution modes available for trading.
• Implements practically any trading methods.
• Advanced built-in reports on all trading activities.
• Built-in indicators and graphical objects allows quicker analysis of quotes and trade decision-making.
• High performance and excellent speed MQL5 development environment with new IntellySence system and more complicated strategy tester.

As most of you’ll know, Metatrader 4 ( MT4 ) is the most widely used ‘off the shelf’ platform in the currency trading 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 just about all foreign exchange bots 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 consequence, 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’s actually not correct. MT5 is probably going to be in beta for a minimum of six more months. The existing Mt5 beta doesn’t even include a method testing function. So it could be as long a year before any significant MT5 androids become available.

Even when MT5 has matured into a stable trading platform, the incredibly popular MT4, is still going to be supported by brokers for several years to come. If traders demand it, brokers will support it. You can 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 form of a compatibility module or MT4 virtualization plugin for MT5. Instead of recoding every MT4 indicator and EA for MT5, it is nearly 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 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 five development we presumed that we will 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 accepted that just can not make a new language compatible. At the same time we have made MQL5 more powerful and in this fashion 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 reached at the same time.’ Interview with Metrader5 lead developer

The complaint frequently heard about MT4 is that it was built by programmers not traders. Certainly it was built with attention on the front end and’client side’ instead of the brokers back office side. The platform itself evolved from a price and info delivery terminal that became very popular with traders. Users then started to ask whether trading functions might be built into it. Metaquotes employed 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 that the NFA controlled foreign exchange 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 is the brokers who pay for the Metatrader platform.

To meet Forex industry standards, MT5 changes the whole core of position handling. From this point 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. 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 five account as one position’Long GBP/USD three 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 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 an extremely attractive prospect.

However there’ll be other instruments and charts accessible beyond foreign exchange. Like futures ( cfd-versions ) together with heaps of option classes. Tons of opportunities for real-world hedging, ( i.e. Where the 2 instruments aren’t identical ) and for trading styles that are at present not possible. Such as buying 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 ) prevents counter trend trading or taking part in a quick scalp in the other way when you already have an open position. It doesn’t have effects on your net position but it affects the way you may manage your trades.

Correlation secrets are also a noticeable alternative way to hedge. Hedging a position can be achieved by taking position in more than one linked 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. Actually if you’re trading on more than one currency pair then currency correlations and their impact leverage and risk is something that needs to be well understood.

For more on currency correlations and how to apply it to your trading technique see Correlation Trading system

For more about the Forex Correlation Code system here the Correlation Code Platform