MetaTrader 5 (MT5) is a trading platform that was originally created for trading under the netting position. This netting system permits you to have only one trading position for every financial instrument that you have. This means that all other operations on that instrument will only close down. Reverse or change of volume of the existing position are also possible. But traders couldn’t settle with that one option only. Then, the second accounting system was created – the hedging.
Hedging paved the way for the creation of multiple trading positions in one symbol, including those opposite ones. Another trading strategy based on ‘locking’ has been created. In this strategy, if the price goes against the trader, the trader can open a trading position in the opposite direction.
The new system is quite familiar to traders because it is used in MetaTrader 4. Traders also get to enjoy all the benefits brought by it including filling orders through the use of multiple deals, multithreaded tester using the support from the MQL5 Cloud Network, multicurrency and so much more. Traders are now able to use a single account when trading in different markets unlike in the netting system which only allows one trading position in every instrument.
This system only allows one position per symbol at a time. In the case of an open position in one symbol, when a deal gets executed in the same direction, the volume of the position gets increased. Meanwhile, if a deal gets executed in the opposite direction, the position’s volume will be decreased. Then the position gets closed or reversed in case the volume of the opposing deal is more than the current trading position.
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No matter the cause of the opposite deal, whether it is triggered by a pending order or an executed market order.
This trading system allows you to open multiple trading positions under many symbols which include the opposite positions. If you have an open position and you made a new deal, another position will open up but your current position remains unchanged.
What Are the Impact of the System You’ve Selected?
Depending on the positions you’ve chosen, these platform functions may take place.
Rules with regards to Stop Loss and Take Profit could change.
When closing a position under the netting system, you must first open trade under the opposite trading operation both with the same volume and symbol. When closing a position in hedging, tap the “Close Position” tab located at the context menu.
You cannot reverse the positions in the hedging system. In this system, you can only close the current position and the new one which still has remaining volume will be opened.
As for the hedging system, there is a new condition available for the margin calculation. It is called hedged margin.
MT5 can be used to trade on stocks and Forex through hedging. This is such an important upgrade and advantage for traders who are keen on trading on multiple markets.