MT5 – A Probably New Beginning For Everything

[Versiunea romaneasca] [ in romana] [English edition]

This was the title of my last post in my former blog on the website – the romanian forex community. At that time I was announcing my decision to move my blog on a brand new domain – my own. However, things changed and there had come the decision to write a magazine. But what kind of magazine ? Well, there are plenty magazines for traders. Take a look at the ones better known – CurrencyTrader , Futures & Options Trader… They target most of the time the strategical type of trader. The one that takes long term trades that span on months. This is why most of their analysis are floating around market forecasts. Of course, around these, different platform commercials and explanations of “forex” terms.

The retail forex market is around for some good years. In the so-called “western world”, these markets became known and called for retail traders right from beginning. But here, in Romania, where the authors are located, forex is still not too much known. However, we will not make a forex magazine. As I said, forex was what was offered to beginners at that time. Things have started to change a bit a few years ago, when forward steps have been made by several brokerages, that started to offer futures and equities under MetaQuotes’ most acclaimed platform, MT4. But it wasn’t the time of a revolution in retail trading. Because MT4 was not designed – although it is the best retail trading platform – to trade the manner professional traders think and do it. Therefore, several trading strategies that were known to professional traders and , in general, to the hedge fund world, have remain hidden from the sight of retail traders. Even more, brokerages commercials and forums accentuated the traders indoctrination that forex was the ultimate market that could have been traded. Lots of trading strategies and markets were hidden : pair trading strategies, quoting, forex arbitrage (although it was tackled at that time by a few, including myself) , forex / futures arbitrage, commodities arbitrage, and finally option strategies. Option strategies still are, at this time, the realm of derivatives quants. Even professional option traders don’t trade the way they might think – because either the platforms can’t do it and the NFA regulations restrict it. Here are some facts about trading platforms and regulations:

– most of them do not have a backtesting module;

– most of them do not support even exchange traded options, not speaking about exotics;

– most of them do not offer automation for options, and that including the well-known TradeStation and OptionStation;

– option stations may not support any other assets – example RAN Order and IKON.

– the ones that have a backtesting module may not backtest multiple assets;

– data feed is dependant on either broker or data provider; so you may have, or not, what you desire to trade;

– they might offer their own scripting language or API ; professional platforms might offer only FIX specification and leave automation on the hands of extremely skilled C++ programmers;

– under NFA regulations you cannot trade in a forex account anything else besides forex, gold and silver. Anything else, including forex options or real futures, trade in a separate account;

– under NFA regulations you cannot trade CFDs (broker manufactured assets that mimic real market, being tailored to small investors);

– under NFA regulations you can trade futures, equities, and options in the same account;

– and finally, under NFA regulations, you cannot hedge – that is, you cannot be long and short at the same time on an instrument ; even more, positions open and close in a FIFO manner.

Unfortunately, MT4 didn’t score too much either ; a limited platform, extremely latent , which can’t backtest anything but strategies trading one asset and with no implementation of options. As a result, anything quite constructive that could have been built in theoretical conditions (i.e. textbook strategies) could not be backtested or not even implemented at all.

But with the emergence of the new MetaQuotes’ flagship platform, MT5, things have started to change. At the time this article is being written, MT5 is in open beta. The “Strategy Tester” module (which is well known by some of our readers and will be also presented in future articles) is not present in the platform. It is our belief that the Strategy Tester will allow development of multiasset strategies. Multiasset backtesting is needed in a lot of situations. I might even say that all successful trading is multiasset trading. You might ask why. And the answer is simple. All [successful] trading is a form of arbitrage. Some will argue and say that very good trading systems don’t arbitrage – but when you look at a sheet with trades and see a good percentage of profitable trades that are not offset by bad trades, somehow the system knew to buy something cheap and sell something expensive, so it does nothing else than a price-value arbitrage. But one-asset markets are just too random for the unexperienced trader to handle. After all, what is of value is the multiasset approach, because markets can’t be too efficient overall. Correlations are broken, parity relations are broken, add to this the magic of options, and look at the big picture : markets become full of opportunities! Now don’t ask why they got into the crysis : they had too much money, way too much money in order to make enough using opportunities.  After all, we’re not interested in universal strategies that apply to everyone. But in strategies that apply to US, THE SMALL GUYS.

So, given that the new MT5 comes with new features, like multiasset backtester, option trading and event-based programming, we decided it was time for a magazine for all things MetaTrader. Of course, with the accent on MQL programming.  The magazine will be addressed to all categories of MetaTrader users: absolute beginners that never heard of trading and are making the first steps in the world of markets, MetaTrader traders that use the terminal , and finally all categories of MQL programmers – task specific programming and also complex strategies design and programming.

Stay tuned for our next articles.

One Response to “ MT5 - A Probably New Beginning For Everything ”

  1. Investeo on January 15, 2010 at 3:41 pm

    Bogdan, congratulations on the website. Please keep up with providing the professional content. I am also a trader from Eastern Europe myself and beeing a self-taugth mql programmer I do understand the need of such quality information.