Introduction
A trading platform is the workspace of a trader, which is why choosing the right platform requires a fair amount of analysis and comparison. Accessibility, analysis, integrations, and feature set of a trading platform play a vital role in the success of a trader.
When it comes to trading Forex, MetaTrader 4 and 5 are the industry standards. Due to the popularity of these platforms, most brokers offer both platforms. While both of these applications were created by the same company, MetaQuotes, there are some similarities and differences that set them apart, as discussed in the article.
MT4 uses MQL4, while MT5 uses MQL5, programming languages that are used for coding indicators and Expert Advisors (EAs).
Highlights and Key Takeaways
- MetaTrader 4 has an easier-to-navigate user interface that targets beginner Forex traders. The community is vast due to its age-old forums and broker offerings.
- MetaTrader 5 has a superior user experience when it comes to added functionality, tradable assets, and customizability.
Asset Coverage and Market Opportunities in MT4 and MT5
MetaTrader 4, or MT4, was first released in 2005 as a Forex specialized platform. MT4’s user interface, charting abilities, and automated trading tools set it apart from other options in the market to make it one of the most popular trading platforms globally. MT5 was released after the success of the previous platform to cater to a wider range of assets, including stocks, futures, and commodities. However, the differences in design and usability made MT4 vs. MT5 a popular subject among traders.
The major difference between the both platforms is the range of tradable assets as stated below:
- MetaTrader 4 is a specialized trading platform for Forex and CFDs.
- MetaTrader 5 has a more diverse range that allows users to trade in other financial markets, such as stocks, commodities, and cryptos, in addition to Forex.
- MT5 offers a more advanced strategy tester, allowing traders to test and optimize strategies more comprehensively than MT4.
The multi-asset offering is one of the reasons for MT5’s success, but given the size of the forex market, MT5 has yet to find a user base comparable to MT4.
For both MT4 and MT5, MetaTrader’s mobile applications allow traders to access the platform on smartphones or tablets. The most important factors that differentiate MetaTrader’s mobile applications from all other trading platforms are real-time trading capabilities and synchronization with the desktop version.
Key Features and Functionality of MT4 and MT5
MetaTrader 4
Although MT4 is slightly older, the platform offers a plethora of services that go toe-to-toe with other popular competitors in the market. The key features of MT4 include:
- User experience: Since MT4 was created with Forex in mind, the UI/UX of the platform is very simple. The menu has very little clutter and is extremely easy to navigate. There are 4 toolbars, namely Standard, Charts, Line Studies, and Timeframes. The market watch tool helps navigate through trading pairs where users can access charts as well. Setting orders in the platform is also made simple through the New Order feature, which offers everything required to successfully carry out a trade.
- Technical analysis: MT4 offers a wide range of technical analysis tools and add-ons to help forecast the prices to make efficient trades. These tools include pivot point indicators, high-low indicators, and Renko indicators, among others. Users can also use sentiment analysis tools and correlation matrices to make sound judgments.
- Order types: The different order types in the platform are designed for the users to maximize profits while minimizing losses. Once the user is familiarized with the market movements using the technical analysis tools, the following order types can be utilized to take positions:
- Market Order: Buy or sell a currency at the current price.
- Pending Order: Buy or sell a security at a predefined price in the future.
- Stop Loss: Automated protocol to sell a security if the price falls below a certain level. This helps users minimize their risk and losses.
- Take Profit: Automated protocol to sell a security if the price rises to a certain level to ensure profit.
- Buy stop order: This order is placed at a price level higher than the current market price, and it becomes a market order to buy when the price reaches or surpasses the specified stop price.
- Sell stop order: This order is placed at a price level lower than the current market price, and it becomes a market order to sell when the price declines to a level at or below the specified stop price.
MetaTrader 5
After being released in 2010, MT5 gained quick traction from traders due to its diverse range of assets and spectrum of features.
- Speed: MT5 is much quicker to use than MT4. This is due to the fact that MT5 is a 64-bit multithreaded platform while MT4 is 32-bit mono-threaded. Additionally, MT4 uses a single dedicated server, while MT5 has a more optimized multiserver setup.
- Additional features: MT5 offers a wide range of features as an improvement on MT4. MT5 has an additional economic calendar tab with features including schedule, impact, forecast, etc.
- Technical analysis: MT5 has a greater number of technical indicators, graphical objects, and timeframes. These tools include Fibonacci lines, Gann analysis, moving averages, and Elliot tools. The platform boasts 38 technical indicators, 44 analytical objects, and 21 timeframes, making it a better option in terms of trading experience.
- Order types: While MT4 offers 4 types of pending orders, MT5 has 6. Apart from that, MetaTrader 5 also offers DOM (Depth of Market) and netting services.
Algorithmic Trading and Automated Strategies: MT4 vs. MT5
MetaTrader 4
One of the main reasons for MetaTrader 4’s popularity is its algorithmic trading feature. This refers to giving users the ability to trade using automated strategies. MT4 has Expert Advisors (EAs), which essentially are Forex trading bots that help you automate trade parameters as well as set alerts according to market conditions. The combination of technical indicators and EAs makes a killer combination for traders to succeed.
This not only helps with time-saving but also places an efficient risk-management strategy that manages risk through strategic trade entries and exits.
Optimizing algorithmic trading and EAs requires a thorough understanding of market dynamics, which includes economic events such as CPI (inflation data), NFP (non-farm payrolls), geopolitical developments, market sentiment, and global trends. These elements continuously affect price changes, necessitating that traders correctly optimize automated trading systems.
MT4 also comes with an MLQ4 programming language that helps programmers create custom bots that can be used to execute more technical trades by writing algorithms that suit your trading strategies. The language is object-oriented and is fairly easy to customize.
MetaTrader 5
MetaTrader 5’s automated trading takes an edge over MT4 due to the ability to trade in multiple assets. The EAs are also more advanced as they allow additional inputs, more order types, time frames, market depth, and support for netting and hedging systems.
The most prominent difference is the better back-testing functionality. The multi-threaded MT5 system implements back-testing at superior speeds, which creates a slight imbalance between the two languages.
Multi-threading in MT5 certainly improves back-testing capabilities. Compared to MT4, this architecture’s parallel processing capability allows for quicker back-test execution. This speed advantage might be especially helpful when optimizing trading strategies in a shorter amount of time or when doing thorough historical data analysis.
Even if the platform’s native programming language MT5 is similar to MT4, but due to the additional features, it opens more avenues for traders to explore. The most prominent difference is the better back-testing functionality. The multi-threaded MT5 system implements back-testing at superior speeds, which creates a slight imbalance between the two languages.
Flexibility and Customization
While both platforms have interfaces that have easy-to-navigate toolbars and menus, they are extremely customizable. However, due to the added complexity of the platform, MT5 has a slight learning curve.
The famous and extensively used trading platform MT4 is renowned for its dependability, stability, and appeal to traders. Customizable charts, technical analysis tools, and automated trading via Expert Advisors (EAs) are just a few of the features and tools it offers for trading.
Both of these platforms offer a fair amount of flexibility. MT4 offers a lot of customizability when it comes to charts. Users can add objects, indicators, colors, and alerts to create the best analysis, while MT5 offers more precision, customized indicators, timeframes, personalized layouts, and additional objects and indicators. MT5 also has a feature that allows traders to create and save their trading algorithms.
Overall, whichever platform you choose, you get a lot of room to play to create the best trading strategies. This includes objects, charting abilities, scripting, and automated trading setups.
Community and Support
In the world of online trading, both MT4 and MT5 platforms have big communities where traders connect and help each other get better. MT5’s community is especially lively, offering lots of support through tutorials, webinars, and a special section on the MetaQuotes website for MQL programming. This extra support shows that MT5 users are really active and keen on helping each other succeed in trading.
Individual traders may have different ideas about the benefits and drawbacks of each platform’s community because preferences might change depending on particular demands and interests.
Conclusion
As explained previously, both platforms are industry standards when it comes to asset trading. However, the decision to select comes down to individual preferences and required feature sets.
- MT4 targets Forex traders, while MT5 has a diverse multi-asset market.
- MT4’s ease of use makes it more suited to beginners and retail users in the forex market, while MT5’s customizability has a bigger market for advanced traders who require complex instruments.
MetaTrader 4 would be the obvious choice if you don’t need too much functionality and you want to trade Forex and CFDs. For all the other reasons that help advanced traders customize, broaden their scope, and build vast portfolios, MetaTrader 5 has a slight edge. Ultimately, the choice comes down to your capabilities, requirements, and trading styles.
If you’re in the market to learn, start with creating a healthy trading mindset that is going to serve you in the long run, learn about proper risk management, and find a mentor who is going to help you get through the hard times.
Then you can go about creating automated trades in the forex market, and be willing to engage with a bigger community. While it’s good to applaud other traders when they succeed, you should always go by your own standards and not let their success deter you.
FAQ
What Are The Main Differences Between MetaTrader 4 (MT4) and MetaTrader 5 (MT5)?
MT5 has a broader feature set that comes with more technical indicators, assets, and customizability. MT4 is easier to use and operates within the Forex market and CFDs.
Is MetaTrader 4 (MT4) or MetaTrader 5 (MT5) More Popular for Forex Traders?
MetaTrader 4 is by far the most popular and widely used trading platform.
What Instruments Can Be Traded on MetaTrader 4 (MT4) Vs. MetaTrader 5 (MT5)?
You can trade Forex, stocks, commodities, and crypto on MT5, while MT4 only allows Forex and CFDs.
What Customization Is Available in MetaTrader 4 (MT4) Vs. MetaTrader 5 (MT5)?
Both platforms offer a certain level of customizability. MetaTrader 5 is slightly ahead with its ability to add custom indicators, chart templates, and custom timeframes.
What Technical Analysis Tools Are Available in MetaTrader 4 (MT4) and MetaTrader 5 (MT5)?
MT4 offers 30 technical indicators and 9 timeframes, while MT5 boasts 38 technical indicators, 44 analytical objects, and 21 timeframes. While MT4 has enough technical tools, such as MACD, RSI, and Moving Averages, MT5 has additional tools, such as economic calendars, advanced EAs, and much more.
How Does MetaTrader 5 (MT5) Improve on MetaTrader 4 (MT4) in Terms Of Features?
MetaTrader 5 is a step ahead with multi-threading servers, additional order types, technical analysis tools, and automated trading strategies with superior back-testing.
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