The trading system in MetaTrader 5 differs from that of MetaTrader 4 in its basics. First of all, four types of trade operation execution are supported in MetaTrader 5: Market, Instant, Request and Exchange. Secondly, the new terminal accepts the strict delimitation between the notions of Order, Trade and Position.

  • Order. This is the direction to a brokerage company to buy or sell a financial security. There are two major types of orders: market and pending. Two more special orders are available in the new terminal - Take Profit and Stop Loss.
  • Trade. It`s the fact of security buying or selling. A Buy is performed at the Ask price, while Sell is done at the Bid price. A trade can be opened as the result of market order execution or pending order activation.
  • Position. It`s a market obligation, number of bought or sold security contracts. A long position is a symbol bought expecting the security price raise. A short position is the obligation to supply it expecting the further price fall. Only one position for a certain security can exist on a trade account.
Differences between trade positions in MetaTrader 4 and MetaTrader 5:

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Besides the Buy and Sell market orders, 6 types of pending orders are supported:

  • Buy Limit is a trade Buy order at the Ask price equal to or better than that indicated in the order. Usually orders of this type are placed expecting that the symbol price falls till a certain level and starts raising then.
  • Buy Stop is a trade Buy order at the Ask price equal to or better than that indicated in the orders are placed when a security price us expected to get over a certain level and continue growing.
  • Sell Limit is a trade order to sell at the Bid price that is equal to or better than that indicated in the order. In this case a security price is expected to raise till a certain level and go downwards after that.
  • Sell Stop is a trade order to sell at the Bid price that is equal to or better than that indicated in the order. The current price level is above the value indicated in the order. Usually such orders are placed when a security is expected to fall down to a certain level and continue the downward moving.
  • Buy Stop Limit - this type of orders is the combination of the first two types being a stop order for placing a Buy Limit order. As soon as the Ask price reaches the specified value, a Buy Limit order will be placed at the level indicated in the order. The current price level is lower than that, reaching which a pending order will be set.
  • Sell Stop Limit - this type is the stop order to place a Sell Limit order. As soon as the future Bid price reaches the value specified in the order, a Sell Limit will be placed for the level indicated in the order. Here the current price level is above the value, reaching which a pending order will be placed. The price of the pending order is above the level of its placing.
Pending Orders in MetaTrader 5 Client Terminal:

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All these possibilities enable you to flexibly control all trading activities and implement almost any trading strategy.

How Does It Work?

An order to execute a trade with indicated parameters is sent to a broker from the client terminal. The order correctness is checked on the server. Are all the parameters (balance, lot, price, etc.) indicated correctly? If any of parameters does not meet the requirements, the order is rejected. If everything is correct, a trade order is placed to the Order Queue, after which it is sent to a dealer or to the market. An order can be also rejected in the market (stock exchange) or by the dealer.

Trading operations Execution in MetaTrader 5:

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An order turns into a trade if all its parameters are correct and it has been executed in the market. Depending on the current position for the security, the trade can result in the position increase, decrease or closing.

Example: we've got one position for EURUSD 1 Lot. If another lot is bought, the position will be increased to 2 lots. If 1 lot is sold, the position will be closed. If 0.7 lots are sold, the position will diminish to 0.3 lots.

Fill Policy

Besides common order execution rules set by a broker, trade operation execution policies can be set in MetaTrader 5. These policies allow making trading activities more flexible and setting strict parameters to manage the execution of trade operations.

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  • All or None
    With this condition, a trade can be executed only for the indicated volume and at the price equal to or better than that indicated in the order. If the enough security volume is currently unavailable in the market, the order won't be executed.
  • Cancel Remains
    In this case a trader agrees to have a trade executed for the volume maximally available in the market within the volume specified in the order and at the price equal to or better than that indicated in the order. No additional orders are placed for the deficient volume.
  • Return
    In this case a trader agrees to have a trade executed for the volume maximally available in the market within that specified in the order and at the price equal to or better than that indicated in the order. Besides, an additional order is placed for the deficient volume at the price indicated in the order.
Source

3 comments

echelon4x said... @ September 22, 2009 at 6:12 PM

"Only one position for a certain security can exist on a trade account."

This is not good at all !!!

Say, I have a USD/JPY Short trade which is running at a loss of $5,000 which I'm expecting to come back into range, however I have commitments where I'll be unable to monitor the trade for several days.

Given the economic climate as it as (and even in more stable times unexpected things can happen), I don't want to leave my trade exposed to abnormal shifts against my position. So in MT4 I hedge my trade with an equivalent Long trade thereby immediately "freezing" my loss.

This leaves me free to travel and not worry about my trades until I return when I can actively monitor them and adjust to ensure that I ultimately gain profits from both trades according to market swings.

So, with the wonderful new order system in MT5, I have two choices in this situation:

1) Close my Short trade for an immediate loss of $5,000.

2) Leave my Short trade and hope the market doesn't go ballistic Long whilst I'm away which will blow my account.

This may comply with US regulations on hedging, however a large amount of accounts have been shifted from the US to other countries purely so that hedging can still be employed.

I can't believe that you guys have implemented this.

trchalik said... @ November 6, 2009 at 6:06 AM

How can I solve this situation in MQL5?
http://forum.mql4.com/27308

Elroch said... @ January 10, 2011 at 9:44 AM

There is not the slightest disadvantage to closing it at the point where you would hedge it, and re-entering the position at the time when you would have removed the hedge. Many people misunderstand this fact.

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