Nicola Tavendale
Nicola Tavendale

The Coronation of MetaTrader 5: Will it be crowned the FX Platform of choice?

MetaQuotes fifth generation trading platform, MetaTrader 5 (MT5), launched in 2011. Despite muted initial adoption, the platform is finally catching the interest of the forex market and interest is growing at a rapid pace. Nicola Tavendale investigate

First Published: e-Forex Magazine 73 / FX Brokerage Operations / September, 2016

“When MetaQuotes launched the MT5 platform it didn’t include hedging features,” explains Tom Higgins, founder and CEO, Gold-i. “Because the National Futures Association (NFA) had disallowed this in retail FX they thought the whole world would follow. Time has proven that they were wrong. This is why MT5 has taken so long to be popular in the FX world.” The NFA’s Compliance Rule 2-43(b) was introduced two years prior to the launch of MT5, expressly prohibiting what it deems to be hedging in US-regulated forex trading firms. In its place, it requires multiple positions held in the same currency pair to be offset on a first-in, first-out (FIFO) basis. The ban on hedging effectively conflicted with the systems used by many forex traders yet the launch of MT5 reflected this change, despite the ban only affecting the US. So while the MT5 platform gained some traction in the single stocks arena it was not picked up at all by the forex community. MetaQuotes finally decided to address this by making some changes to MT5 a few months ago so it could support the same trading model as MT4, explains Higgins. “So you can now go long and short, or you can go long multiple times,” he says. “It’s now compatible with the same trading model as MT4.”

Higgins adds that the other significant change made by MetaQuotes recently was to the platform’s commercial model, with brokers now being able to purchase an upgrade model rather than a whole new copy. “Coupled with hedging this suddenly makes MT5 very viable,” says Higgins. Andrew Ralich, CEO, oneZero Financial Systems agrees, stating that his firm has noticed a “significant uptick” in demand for MT5 Gateway connectivity into oneZero’s hub and the platform is finally gaining viability among brokers. “We have partnered with MetaQuotes to integrate new liquidity options via oneZero, such as CQG or Interactive Brokers, which complement these new functionalities by bringing accessible cross-asset liquidity to the platform,” he adds.

Tom Higgins

Tom Higgins

“Social trading is really, really important. I think it is the biggest change that has taken place in retail trading in recent years and now it is really taking off. It was available in MT4 but I think it will be bigger and better in MT5.”

Broader appeal

People just do not want to use the telephone to buy stocks anymore, they want to do it themselves and they want to do it online, says Chris Zacharia, marketing director, XM. “This is where the demand for a multi asset platform has evolved from,” he adds. “MT5 is here and has been built to bridge that gap and meet that need. It can now serve not just FX traders but stock traders, bond traders and any other asset class all from the same interface.” While MT4 was the platform of choice for over a decade, it was a platform designed for forex trading. “The natural development is for the next big thing, the next MT4,” Zacharia adds. “An online trading platform which can match what MT4 had to offer to FX traders but makes it available to a much, much larger audience.” 

In the past there was also some resistance from the retail FX community to jump on the MT5 bandwagon, adds Shawn Dilkes, managing director, Forexware. But the ability to hedge has helped open up the rest of the retail world to the benefits of the platform, he says. “There’s really nothing else on the market,” Dilkes explains. Retail traders are able to benefit from the same MT4 trading experience in addition to new features such as enhanced order management capabilities, multi-currency strategy testing, built-in calendar and support for 2-minute and 8-hour timeframes. “There’s also the price point – where else can you get a platform at that price point that offers all of that?” says Dilkes. According to Jameel Ahmad, vice president of corporate development, FXTM, this demand is essentially being driven by a recognition from traders of the multi-functional benefits offered on the MT5 platform. “The option of hedging has enabled traders to implement bi-directional trading strategies, which will gradually become a key factor in the future growth of users for this platform,” he adds.

Chris Zacharia

Chris Zacharia

“MT4 could satisfy the needs of FX traders, while MT5 is open to a whole new audience of multi-asset retail traders. I would say it’s the platform of choice as we speak.”

Room for growth

But despite the added functionality, from the trader’s perspective MT5 is fundamentally quite similar to MT4 in both look and feel. “For the users, they can trade in the same way,” states Higgins.

Yet for FX brokers MT5’s clustered system and distributed architecture offer distinct advantages over the MT4 platform, particularly when it comes to scalability. “One of the biggest challenge FX brokers have today is the ability to adapt to changes fast,” explains Andreas Loizides, CIO, XM. “Brokers really need a platform which is scalable and easy to manage from one central space.” Unlike the MT4 platform, MT5 enables brokers to split trade servers, history, access and back servers in a distributed environment as opposed to having to add additional servers with different configurations. “The burden of administering servers separately creates the need for more manpower and allows space for human error every time the trading architecture is expanded or enhanced,” he adds. 

A broker’s biggest challenge is educating customers about the compelling advantages of MT5 over MT4
A broker’s biggest challenge is educating customers about the compelling advantages of MT5 over MT4

Robust architecture

From a broker perspective there are also three different licensing options, which allows them to progress from entry to standard level then to an enterprise license. Under the enterprise option, the system itself can be scaled up so there is no limit on the number of instruments or customers that they can support, says Dilkes. “This is due to its de-centralised design where there is a segregation of roles and responsibilities within the system” he adds. “For instance quotes, trades and reports are all separated.” In addition, Yiannos Xenophontos, chief dealer, FxPro, highlights MT5’s APIs which now fully allow all the platform capabilities to be further expanded. “You can use open APIs to customise MT5 components, complement their functionality or integrate the entire platform with your trading and post-trading systems,” he explains. And unlike MT4’s API’s which were only partially documented, MT5 is fully documented which allows brokers to scale their systems in a more predictable way.”

But in very volatile markets it can be hard for MT4 to cope with the sheer volume of data being produced. The result, say Higgins, is that system integrators are constantly looking at bottlenecks in their hardware, software, networks or disk systems. “To some extent that goes away with MT5 as it’s a clustered system so if you want it to go faster, you can put more servers in,” he adds. “If you have more users, put a new server in and it takes some of the load.” But compared to MT4’s technical architecture, which is now over a decade old, MT5 boasts a more efficient, scalable system regardless which can go faster even without a clustered system. In addition, one of MT4’s difficulties was that it wasn’t multi-threaded. Higgins explains: “MT4 can’t take advantage of this because it generally has one programming line that it goes down so even if you have lots of CPUs it can’t use them. MT5 is more multi-threaded and can use bigger machines and extra CPUs.” 

Andrew Ralich

Andrew Ralich

“We’re preparing to support our global client base in transitioning to MT5 as a point of client access.”

Multi-asset class appeal

In addition to a more robust, scalable technical architecture, MetaQuotes has also structured MT5’s Trade Gateways so they can be located as close to the liquidity source as possible. This helps significantly reduce latency, says Dilkes. Furthermore, the system has a much broader range of order types over MT4 and allows additional instruments to be supported. “This offers traders a true multi-asset trading platform for FX, equities and futures,” adds Dilkes. “In addition, depth of market support provides traders true transparency into the market.” For traders, MT5 offers four execution modes: instant; request; market and exchange alongside another two pending order types: buy stop limit and sell stop limit. There is also an additional order fill policy in MT5: the immediate or cancel return. MT5 also provides preventive mechanisms to reduce risk, Xenophontos adds, in addition to tools for the automated monitoring of technological, financial, margin (credit/limit) and operational risks. “The platform supports a variety of risk management tools for all asset classes to meet the requirements of different business models,” he says.

But from a broker’s perspective, migrating from MT4 to MT5 presents significant integration and legacy issues which will need to be overcome. According to Loizides, MT5 is not a simple ‘plug and play’ upgrade. “Applications need to be reworked and become bi-lingual so they can respond to both MT4 and MT5,” he warns. “For this, we suggest the implementation of a centralised application server that responds to web-service calls and abstracts common operations behind an interface to the various systems of the infrastructure.” 

Shawn Dilkes

Shawn Dilkes

“With the introduction of the multi-asset platform, MT5 and MQL5 traders now have the ability to automate trades across multiple asset classes.”

Liquidity management

Yet as brokers do begin to migrate to MT5 they will be able to leverage the newly introduced solution for integration with popular ECN liquidity providers, forex pools and direct connectivity to global financial exchanges, further enhancing their liquidity management operations as a result. The introduction of the Trade Gateway product in MT5 allows for out-of-the-box integrations, enabling brokers to add new providers with ease adds Dilkes. “As MT5 gains more market traction I’m sure we will see additional Trade Gateway products offered,” he says. And according to Xenophontos, all gateways are easy to operate which ensures control and flexibility. “Using gateways, brokers can provide access to various financial exchanges through other exchange participants,” he adds. This additionally helps brokers to continue offering the best trading terms for their clients, says Ahmad. “Easy access to liquidity enables us to provide our traders with some of the best bid and ask prices in the market,” he adds.

In addition, technology integrators such as oneZero have formed direct partnerships with MetaQuotes to bring cross-asset liquidity to the MT5 platform through providers that traditionally have not been accessible to the MetaTrader broker community. In a bid to accelerate the uptake of the MT5 platform, oneZero has also been working for months to train its 24/5 operations and IT staff around the specifics of MT5, according to Ralich. “We’re preparing to support our global client base in transitioning to MT5 as a point of client access,” he adds. Despite the number of significant advantages MT5 offers over MT4, however, without the addition of hedging functionality no one would have used it, explains Higgins. He adds: “Clients couldn’t use it to trade the way they wanted to trade. So bringing hedging in has made all the difference.”

Jameel Ahmad

Jameel Ahmad

“The option of hedging has enabled traders to implement bi-directional trading strategies, which will gradually become a key factor in the future growth of users for this platform.”

Accelerating uptake

Ultimately there may still need to be more of a push from MetaQuotes if it wants to increase the rate of MT5 adoption, particularly among established users. 

However they wish to encourage swifter uptake of the platform, the level of technology investment which MetaQuotes has made with MT5 is significant and will need to be recouped. Based on broker’s feedback, it appears to have successfully develop solutions that address current client demands. “We are now seeing a multi asset platform that offers netting and hedging systems, 31 technical indicators, 23 analytical objects, one-click-trading and the entire set of trading orders in a state of the art 64bit trading platform,” Loizides adds. “We feel that MetaQuotes has significantly stepped up the support to brokers. It is more open to other technology providers, providing them resources and support to cover the needs of brokers and the market needs on a global scale,” he says. 

Andreas Loizides

Andreas Loizides

“We feel that MetaQuotes has significantly stepped up the support to brokers.”

Migration issues

Yet with any broker it is ultimately the end-user who drives the business, claims Dilkes. “MT5 has all the components available that customers demand including desktop, web and mobile trading functionality,” he adds. “I think a broker’s biggest challenge is educating customers about the compelling advantages of MT5 over MT4 and encouraging them to make the change.” In addition, adding a new platform can provide additional complexity for a broker who is managing risk, reporting and points of integration for their liquidity providers. But according to Ralich, oneZero brokerage clients have been taking advantage of its hub solution as a centre point to their multi-platform, multi-liquidity provider offerings for some years now. “For brokers who already have a oneZero Hub in place, adding MT5 is as easy as defining new spread and execution settings on their existing, proven architecture and connecting it to our certified MT5 Gateway,” he adds.

New age of algo trading

Possibly even more in demand are effective algorithmic trading development programmes and the next generation language MetaQuotes Language 5 (MQL5) will likely play a key role in the ultimate success of the MT5 platform. MQL5 language succeeds in being more powerful which allows users to develop very sophisticated algos, according to Xenophontos. “Compared with the MQL4, the speed of execution of the MQL5 code has increased 4 – 20 times over,” he explains. “The speed of execution has almost reached the level of one of the most popular programming languages: C++, so in MQL5 you do not need to use a third-party dynamic link library (DLL) to speed up calculations.” In turn, the lack of DLL also improves application security. Furthermore, the syntax of the MQL5 language is very similar to the C++ language. “Therefore, it is easy to learn, and you can easily translate programs from other modern programming languages into MQL5,” explains Xenophontos. He adds that because MQL5 is an object-oriented language, this allows traders to take full advantage of this programming approach, including encapsulation and extensibility of types, inheritance, polymorphism, overloading and use of virtual functions. 

Social trading will be bigger and better in MT5
Social trading will be bigger and better in MT5

In addition, the MT5 Editor tool offers an improved strategy tester and strategy tester agent manager for the remote optimisation of expert advisors. “This is great for traders because it enables them to test and optimise the efficiency of their expert advisor before taking it live,” Ahmad says. But from a broker’s point of view, while MQL5 is not completely different from MQL4, it is still different and this brings an additional range of challenges. “All the expert advisors have to be re-written in MQL5 language,” says Higgins. “You can’t convert from one to another, they have to be re-written by the original developer or someone who has access to the source code.” But rather than creating an additional pain point for traders at least, Dilkes argues that MQL5 may increase access to automated trading across exchange based products which has previously proven too expensive for most retail trading. “But with the introduction of the multi-asset platform, MT5 and MQL5 traders now have the ability to automate trades across multiple asset classes,” Dilkes says. “Additionally, for customers with no development skills there are a wide range of robots available to purchase or they can copy successful traders through the Trading Signals service.” 

The integration of unique social features, such as the Trading Signals subscription service and expert advisor, from the MQL5.com Community portal may also boost the uptake of social trading in general. Higgins explains: “Social trading is really, really important. I think it is the biggest change that has taken place in retail trading in recent years and now it is really taking off. It was available in MT4 but I think it will be bigger and better in MT5”.  According to Zacharia, by coupling the social aspects of MQL5 within MT5, MetaQuotes is finally bridging the gap between, information, expertise and trading tools. to any trader using the MetaTrader 5.

MT5 is supported by the largest active community of traders through www.mql5.com
MT5 is supported by the largest active community of traders through www.mql5.com

Proving its worth

Ultimately, the forex industry thrives on innovation and in order to stay ahead, brokers need to offer the most modern and dynamic trading solutions. While MT4 has attracted a very dedicated following of traders, popularity for MT5 is undoubtedly growing, claims Ahmad, especially as a number of brokers, including FXTM, now offer the platform. The capability to offer multi-asset trading through connectivity to global exchanges, the recent addition of hedging and ability to evaluate robots and indicators as close to the real market conditions as possible are helping to drive demand among traders who are eager to gain these extra insights to help them improve their trading strategies. 

MT5 is open to a whole new audience of multi-asset retail traders
MT5 is open to a whole new audience of multi-asset retail traders

“However, for traders to maximise the value which the MT5 platform offers, they also need to carefully choose a broker which is able to offer equally sophisticated products and services,” says Ahmad. But because MT5 has been designed from the ground up, it allows traders access the widest range of features and trading products currently available in any one system, claims Dilkes. “Additionally, it’s supported by the largest active community of traders through www.mql5.com where customers have access to countless robots, indicators and trading applications.” Aside from MT5’s technological improvements and new offerings, Zacharia believes that ultimately the uptake will prove to be a numbers game. “MT4 could satisfy the needs of FX traders, while MT5 is open to a whole new audience of multi-asset retail traders,” he explains. “In addition, it is designed to be a broker friendly platform. I would say it’s the platform of choice as we speak.” 

Yiannos Xenophontos

Yiannos Xenophontos

“Compared with the MQL4, the speed of execution of the MQL5 code has increased 4 – 20 times over.”

Furthermore, the decade-old technical architecture of MT4 is likely to prove increasingly unsuitable for the demands of modern trading. “It’s really getting very difficult to get the system to perform well under heavy load because the architecture is not up to the scalability that’s needed,” says Higgins. This is ultimately why MetaQuotes developed MT5 in the first place. “MT4 will be phased out and replaced by MT5 and there’s nothing else knocking on the door,” he claims. In addition, while MT4 originally started with equities, it never took off due to the limitations on the number of instruments listed. FX generally has the biggest peaks and troughs of any asset class and, according to Higgins, brokers tend not to trade both equities and forex in any significant manner. But MT5 is significantly much more suited to equities trading. “You never really get them as a full broker in both,” Higgins adds. “This technology could change that. Multi-asset trading for retail brokers is the nirvana and MT4 did it a bit, but MT5 does it properly.”

Comparison of MetaTrader 5 and MetaTrader 4
Comparison of MetaTrader 5 and MetaTrader 4