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MetaTrader 5 New Position System

November 7, 2009 by

The new position system of MetaTrader 5 (no-hedge FIFO) is quite different from what the Forex traders used to see in MT4. It spurred many flame wars on various Forex-related forums and made many worthy traders believe that trading with new MT5 adds extra costs to trading (in a form of spread or commission) due to the additional required orders/positions. Some traders also believe that having only one position per currency pair limits their trading strategy opportunities, as they can no longer open short-term counter-trend trades during the long-term trend trades. In reality, this is not true and everything that was possible in MT4 remains possible in MT5 — of course, it will look different, but the result (in form of a profit or a loss) will be the same. According the poll that I’ve posted almost two weeks ago, 53% prefer old MT4 system over the new one, and only 10% prefer new MT5 position system, which is quite sad.

The two presented charts depict the same USD/JPY market situation, processed with the same trading system but on two different platforms — MetaTrader 4 (first picture) and MetaTrader 5 (second picture).

On about August 10 we enter a Short Position by sending a Sell Order @ 97.67 to our MT4 terminal. On about October 9 we realize that it’s a good opportunity to enter a counter-trend Long Position and get some profit from it, without exiting our long-term Short Position. We send a Buy Order @ 88.59 to MT4 and now we have two open Positions of the same size — one Short and one Long. On about October 27 we realize that the counter-trend is over and it’s time to exit our short-term Long Position. We close it (actually, by sending a Sell Order @ 92.23) and get 364 pips of profit from it; at this moment we also have paid 1 full spread to our broker for opening and closing 1 Position. We continue with our Short Position until November 6 and with the current price at 89.86 we have about 781 pips of floating profit on this position. If we close it now, we get a total of 1,145 pips profit for all two closed positions and we’ll have 2 full spreads paid to our Forex broker. As you can see, we were in the market during 3 months, with about 16 days with two positions on the same currency pair but in the opposite direction:

MetaTrader 4 Position System

 

On about August 10 we enter a Short Position by sending a Sell Order @ 97.67 to our MT5 terminal. On about October 9 we realize that it’s a good opportunity to enter a counter-trend Long Position and get some profit from it without exiting our long-term Short Position, but, unfortunately (or fortunately), we can’t hedge in MT5. So, we send a Buy Order @ 88.59 to MT5 platform and it simply closes our Short Position, giving us 908 pips of profit and taking 1 full spread from us. Contrary to the popular belief, we don’t have to open another Position at this point to gain from the bullish counter-trend, because we gain just by exiting the Short Position and avoiding the loss on it. Now we have no market Positions. On about October 27 we realize that the counter-trend is over and it’s time to exit our short-term Long Position, but fortunately enough, we didn’t even open it. So, we reopen our long-term Short Position (by sending a Sell Order @ 92.23). We continue with our Short Position until November 6 and, with the current price at 89.86, we have about 237 pips of floating profit on this position. If we close it now, we get a total of 1,145 pips of profit for all two closed positions and we’ll have 2 full spreads paid to our broker. As you can see, we were in the market during 2 months and then during about 14 days, and we were out of the market for about 16 days:

MetaTrader 5 Position System

In both cases we earned the same profit — 1,145 pips and paid the same amount of pips in spread (equal to 2 closed positions). We used the same system and orders to operate the market and we’ve got the same results. In fact, there is one thing different in term of profit/loss with MT5 and MT4 — it’s the amount of the rollover interest, since you reduce the number of days, during which the positions are accountable for such interest, you reduce your losses from the overnight swap charged on your trading account. The given example can be scaled out to any amount of the interconnected positions. Even a grid trading strategy can be compressed into no-hedge FIFO 1-position system of MetaTrader 5. If you are still not convinced, just ask for more examples and I will gladly provide them.

If you have some interesting comments or questions regarding the new position system of the MetaTrader 5 platform, please, feel free to reply using the form below.

3 Responses to “MetaTrader 5 New Position System”

  1. Paul

    Although a little complicated to code, I think it is quite feasible (and I guess I’m about half-way there so far) to write a “virtual order manager” in MQL5 which maintains non-FIFO orders on the terminal with FIFO orders on the server. See my blogpost here http://paulsfxrandomwalk.blogspot.com/2009/08/virtual-order-manager.html

    Reply

  2. henry

    How do I get this indicator

    Reply

    Andriy Moraru Reply:

    Which one?

    Reply

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