Top 10 MT5 Plugins for Forex Brokers
MetaTrader 5 is undisputedly a powerful multi-asset trading platform that enables brokerages to work with multiple symbol types, including investment funds and ETFs, analyze business performance and provide a smooth trading experience to a large number of clients.
Besides the original features of the platform, there are a dozen technology providers that offer different plugins, add-ons, apps, and more sophisticated solutions aimed at helping brokers fine-tune their trading platform. Trying to make sense of all the offers and, most importantly, choosing the right technology for your business can be a mundane and overwhelming process. Brokeree team has prepared an overview of key plugins that MT5 brokers use for optimizing and automating their risk management processes.
Table of Contents
- Introduction of new symbols
- Swap fees configuration
- Risks during uncertain market conditions
- Advanced setup of Stop-out and Margin-call
Introduction of new symbols
Over the past decades, the forex industry has developed significantly. As a consequence, brokers saw an increase in clients’ demands that were more specific. For instance, a set of major currency pairs nowadays may not fully satisfy all trader’s needs.
To remain competitive, brokers need to offer a comprehensive product portfolio along with cryptocurrency, metals, futures, forex, indices, etc. Moreover, trades must be processed at a technically high level, without notable execution delays, and with tight spreads.
Brokers have various options to expand their trading offers. They can deal with several liquidity or market data providers. However, this is an expensive and inconvenient solution since it may cause multiple problems such as the absence of the requested symbol or technological difficulties in aggregating quotes into the broker’s trading system. There are also cost-effective ways to introduce new symbols on the trading platform. With the help of small tools, brokers can diversify their product portfolio to satisfy clients’ requests for new trading instruments.
Besides opting for traditional symbols, brokers can provide a unique trading experience by creating new trading instruments to diversify their offerings. When it comes to creating a synthetic symbol, brokerages need to have underlying market data, which can be easily acquired for further transforming or merging with another symbols’ data for providing quotes for the newly created symbol. However, the main challenge of providing synthetic symbols is liquidity, since the new trading instrument may be available from only one liquidity provider, who in some cases can be the brokerage itself.
The MT5 Synthetic Symbols plugin transforms existing symbols into new ones with price multiplication. With this tool, brokers can shift the decimal point in the symbol, which can be especially useful during cryptocurrency trading where quotes can be small. For instance, since the majority of traditional symbols have five digits after the decimal point, brokers can introduce TRX1000 at $29.86537 instead of displaying TRX with the price of $0.02986537, thereby providing an accurate and convenient trading experience.
Additionally, to offset risks, Synthetic Symbols has an inbuilt converter that turns prices to their original forms for further execution at the counterparty, allowing brokers to hedge trades with a new instrument.
Brokers that offer CFD trading on futures often allow clients to hold positions on the expiry date, which often results in difficulties when reassigning trades to new symbols. This is the problem that Future Rollovers is designed to solve.
The plugin simplifies the rollover process for mature symbols according to schedule. It switches clients’ positions to a new future symbol and calculates the difference in prices between two mapped symbols, as well as processes it as a balance operation. All processed rollovers can be accessed historically via the user interface, providing brokers with structured information for monitoring and detecting potential issues.
Swap fees configuration
Straight Through Processing (STP) brokers have to regularly update swaps for all symbols according to the information from a liquidity provider. Manually editing symbol settings on the trading platform is not only inconvenient and time-consuming but can also lead to human errors. The situation complicates further when a broker interacts with several liquidity providers at once.
Brokers can control swaps more effectively or even automate updating processes with the use of small plugins.
Symbol Editor offers brokers an opportunity to update swaps in bulk. One of the solution’s key advantages is the ability to edit symbols in a list according to the liquidity providers’ data instead of configuring settings one by one.
Symbol Editor can be set up to automatically update swaps on a schedule. Additionally, the application has a handy interface that can be easily connected remotely with the MetaTrader platform, providing a convenient way of working with symbol settings.
By using symbols as the key points of interaction with traders, brokers can promote new symbols, minimize operational costs, and manage profits. Swap Manager expands MetaTrader functionality by providing multiple options to organize swap fees. With the plugin, brokers can configure swaps as a fixed fee per trade, fixed fee per lot, or add markup percentages to default swap values.
Flexible configuration of swap-free periods allows brokers to create comfortable trading conditions by minimizing traders’ costs. Brokers can direct clients to try out specific trading instruments by decreasing or removing swap fees for all new trades.
Risks during uncertain market conditions
All financial markets heavily rely on news and economic indicators. The whole market stops “breathing” whilst waiting for announcements from such major events and the subsequent price movement. This behavior quite frequently leads to market uncertainty and potential price gaps, which can cause unpredictable trading results for positions that were kept open during the news event. To protect their business and their clients’ funds, brokerages resort to different risk management techniques.
Risks revolving around major news events can be mitigated by either raising margin requirements during high volatility or by limiting the maximum number of positions a trader can hold. However, trying to manually adjust settings and implement individual risk management strategies across all affected trading accounts becomes a cumbersome process at a time when actions have to be quick and effective.
To solve these issues and ultimately automate and optimize such important processes, multiple plugins have been developed. Among these, three plugins cannot be missed: Dynamic Margin and Leverage, Dealing Desk, and Trade Copier.
Dynamic Margin and Leverage
Financial markets comprise a lucrative industry with high competition, and to attract new clients, brokers have to resort to providing higher leverage as one of their key advantages. Whilst this is definitely an effective marketing strategy, such practices are either countered by regulators, as in the case of ESMA and ASIC, or need close attention of brokers while processing risks to sustain the long-running business. When it comes to margin requirements and leverage settings, brokers can have very different views and approaches to how they utilize them. For example, risk management specialists are the ones to root for high margin requirements, thereby providing lower leverage to clients to minimize potential losses and operate in a more predictable environment.
One of the simplest setups brokers can introduce is the automatic update of leverage based on the client’s balance. This setup prevents clients from opening large positions when their balance increases. Brokers can reduce the leverage so that their clients can still utilize margin trading but with sensible limitations to protect both their and brokers’ funds. With MT5 Dynamic Margin and Leverage, brokers can specify multiple balance levels with corresponding leverage and filter accounts by their MetaTrader 5 ID and balance currency.
Another common approach to manage risks is to temporarily increase margin requirements for specific symbols during increased volatility. For example, OPEC schedules a meeting for 30 November 2020 to discuss oil production, and the outcome of the conference is likely to affect oil spot prices. Such events draw more attention from investors and increase the volatility of oil spots for some time around that date. In this case, brokers can set up new margin requirements for oil-based symbols beforehand with custom schedules.
Volatility is one of the metrics that attracts traders to a specific symbol, especially when it comes to high-frequency trading strategies. Besides being a rather profitable and approachable strategy for some investors, brokerages can experience increased server load that can negatively impact trading experience for other clients.
In order to minimize potential issues with server performance during uncertain market conditions and to protect clients, brokers can use MT5 Dealing Desk. The plugin can restrict “scalpers” by filtering out trades that were open for way too little time, e.g. position can only be closed after 60 seconds from opening.
There are several effective risk management strategies, and to execute them swiftly and effectively, brokers need to monitor information about clients’ positions in real-time. In order to estimate the consequences of increased margin requirements or to decide what positions should be hedged, brokers can use MT5 Trade Copier to aggregate open positions on specific symbols and get a quick snapshot of clients’ exposure.
The plugin copies positions from one or several clients to a coverage account, based on configurable rules. A wide range of settings can be utilized by brokers, including volume multiplier, symbols filter, or even placing a limit order instead of direct copying. This way, brokers can aggregate trades from the entire server and accurately assess the potential impact of planned adjustments to their risk management processes.
Advanced setup of Stop-out and Margin-call
Nowadays most brokers are established with a hybrid business model utilizing the execution speed of the market maker model as well as covering their risks by hedging clients’ positions at liquidity providers. The hybrid execution model provides brokers with the flexibility to either process all the clients’ risks in-house and cover losses with proprietary trading or to partially execute trades on specific symbols at a counterparty. When it comes to partial execution, users can customize several settings to ensure a smooth workflow and to prevent abrupt losses.
Products such as Advanced Stopouts help brokers minimize potential losses for clients at Margin Calls and Stop Outs. With the plugin, brokers can set which trades are closed automatically and which should be kept open.
By default, the MetaTrader starts closing non-profitable trades once a stop-out event is triggered. The solution allows brokers to keep clients’ positions intact by hedging them, i.e. opening a reverse trade to free up used margin. This action gives traders some time to decide whether they want to close losing positions or deposit additional funds, thus raising the overall margin level. Hedging can be configured for specific symbols, providing brokers with flexible options to minimize risks and protect the funds of their clients.
There are other ways to save both traders and brokers from critical losses. For instance, the Margin-credit tracker helps brokers to prevent clients’ balance from dropping below zero by removing credit. There are cases when traders’ losses are greater than the deposited funds and they continue losing money with credit. When such losses are realized, the client ends with a negative balance. A broker can avoid this situation and prevent further damage by withdrawing these credits in time. Margin-credit tracker offers different ways to calculate the level when credits should be removed: an equity-to-credit ratio or a margin level without credit.
Described plugins can be easily combined with other MT4/5 plugins and solutions. For instance, products such as Dealing Desk and Dynamic Margin and Leverage will not only help with Margin Calls and Stopouts events but also provide advanced opportunities for other risk management activities.
This article is just a mere glimpse of the sophistication level that brokerage processes may reach. As you can see there are multiple ways to approach certain challenges. To find the most effective and convenient solutions, brokers seek expertise from companies like ours that already offer several turn-key software covering a multitude of tasks and processes.
If you would like to enquire about any of the plugins mentioned above, or have a specific problem which you can’t quite resolve the way you like, drop us a line via firstname.lastname@example.org
More solutions for MetaTrader 5 at Forex Broker Solutions.
Elite Automation Package
Our Elite Automation Package is a comprehensive solution that includes all the above-mentioned plugins and is available at a monthly subscription.
Product packages are a convenient and cost-efficient way to acquire several apps and plugins. Each package is complemented with additional development and consultancy hours that enable brokers to fine-tune chosen products or gain operational insights from leading industry experts.
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