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Mt5 - A Probably New Beginning For Everything


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After two years of absence, I am announcing everyone that I have decided to move the blog on my own domain. Previous entries will remain here, some will be copied to the new address. However, the launch is highly dependant on how MT5 will be finally implemented - that is, how big will be the capacities of the new Strategy Tester, as well as options that supposedly will be introduced. The blog will focus on MT5 programming and multiasset strategies involving arbitrage, pair trading, and option trading strategies, from simple indicator ruled strategies to complex volatility scalping. The so-called lack of hedging accuse coming from forex traders to the MT5 platform is only partially true - it's based on a lack of knowledge of what hedging really is, which is the terrain of derivatives quants. Hedging with multiple orders on MT4 platform is the most rigid form of hedging. It has a lot of applications in easier trade planning as well as in psychological issues - some traders prefer to hedge against the choppiness of a trend instead of closing trades. But there is nothing to indicate that this hedging would really be beneficial - as it doesn't create any kind of white noise or arbitrage windows (remember that Michal Kreslik called it "futile hedge"). Now it's time for the rest of the world to know and use real hedging strategies, as option traders were almost prohibited to do it because of costs, regulatory issues and platform underdevelopment, that either prevented hedging options with underlying , option automation or backtest. Institutions however will always be a step ahead especially in option trading, because they have the opportunity to quote options and get filled, thereby making large economies, since the option spreads are pretty large. But the introduction of options along fx will be rather unique - for the first time, asymetric trading on the same asset, right from the expert advisor. Asymetric trading is full of opportunities, as portfolios will have double values - values at expiry vs market values - and this is where real hedging comes in place.


I don't promise anything. I really hope MetaQuotes will deliver the final MT5 in a state that will allow options and futures along fx trading. Or at least options along futures and equities (as in NFA regulations) all backtestable simultaneously with a new, renowned, Strategy Tester. In these new conditions, even the "forex trading" concept might vanish soon to be replaced by a radical "retail trading" concept - when traders trade across multiple asset classes without the current limitations.


The ball is still in MetaQuotes' yard, and we still play the waiting game...

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