Founded in 2000, MetaQuotes Software Corp. has cemented its position as one of the leading software developers for brokerages, banks, and exchanges.
With an extensive portfolio of popular products, ranging from the simple Forex Charts platform to the highly acclaimed MetaTrader4 and 5 platforms, it’s no wonder that most brokers worldwide choose to use their software.
If you have been trading in the forex market for a while, you will likely be well-acquainted with the MetaTrader 4 and MetaTrader 5 platforms. Even if you are new, you might have at least heard the names of these platforms.
Both MT4 and MT5 have become a staple in the trading world and are favoured by beginners and expert traders for their valuable tools and resources in analysing positions and executing trades.
Both MT4 and MT5 Trading platforms offer lightning-fast execution and a comprehensive range of trading tools, allowing traders to easily view live streaming prices and charts, place orders, and manage their accounts.
But you shouldn’t be fooled by their similar names, as MT4 and MT5 differ significantly in terms of their functions and features, catering to specific trading needs. The choice between MT4 and MT5 depends on various factors, including your trading background and objectives.
So, what sets these platforms apart?
Let’s dive into the key differences between MT4 and MT5 and help you determine the right one for you.
What is MT4?
MetaTrader 4 (MT4) is a user-friendly and intuitive trading platform that has become a top choice among traders for its flexibility and customizability.
It was created by MetaQuotes in 2005 and has since become a go-to tool for trading a wide range of financial markets, including currencies, equities, commodities, indices, and even cryptocurrency.
One of the key reasons for its popularity is the ability of traders to design their own automated trading techniques.
The platform enables traders to manage their accounts, place orders, and view real-time pricing and charts, all while offering the ability to customize the platform to their individual needs.
Whether you prefer technical or fundamental analysis, MT4 offers a range of tools to support your trading style.
- One-Click Trading: MT4 allows traders to execute trades with just one click, making it ideal for scalping and day trading systems.
- Alerts: The platform supports alerts and notifications, keeping traders informed of significant price movements across financial markets. It also offers email alerts for added convenience.
- Technical Analysis Tools: MT4 comes with 30 built-in technical indicators and 24 graphical objects, allowing traders to use custom indicators developed within the MT4 community. The platform also enables traders to develop new technical indicators and code plugins.
- Drawing Tools: The software offers a range of drawing tools, including diagonal, horizontal, and vertical lines, channels, text, and visual elements like arrows. These tools help traders identify and label support and resistance levels, entry and exit points, stop-loss and take-profit points, and more.
- Orders and Charting: MT4 features 2 market orders, 4 different pending order types (buy stop, buy limit, sell limit and sell stop), 2 stop orders, and trailing stop. Real-time charts with nine different timeframes (from 1 minute to monthly) are also available, allowing traders to explore various financial instruments like currency pairs and CFDs.
- Algorithmic Trading: Expert Advisors allow traders to take advantage of meta trader 5 automated trading strategies. The platform comes with MQL4 IDE, a programming language that enables traders to create their own expert advisors and indicators. Automated strategies can also be monetised by advertising them on MetaTrader’s Marketplace.
What is MT5?
MetaTrader 5 (MT5) is a cutting-edge, multi-asset trading platform that offers a wide range of features for traders.
It provides access to a diverse range of financial markets, including forex, commodities, stocks, futures, and indices, and features a variety of tools for technical and fundamental analysis.
One of its most popular features is the ability to use Expert Advisors or EAs, also known as trading robots, that operate independently, allowing traders to monitor prices and perform trades based on an underlying algorithm.
MetaTrader 5 also offers a versatile strategy tester, fund transfer between accounts, alerts, and a community chat for traders to network and share strategies.
With its advanced tools, diverse functionality, and ability to trade a wide range of markets, MT5 is the ideal platform for the modern trader.
Its flexible trading options, mobile accessibility, and user-friendly interface make it easy to trade from anywhere, anytime.
Let’s explore some key features exclusive to the MT5 trading platform.
- New Order Types: MT5 platform includes two extra order types that are not present in MT4, namely “buy stop limit” and “sell stop-limit”.
- Increased Indicators and Graphical Objects: MT5 has 8 more built-in indicators and 13 additional graphical objects compared to MT4, offering traders more in-depth technical analysis capabilities.
- Improved Strategy Tester for EAs: MT5 has a multi-threaded strategy tester that is faster in executing programmed trading strategies. It also features an Agent Manager, which allows remote optimising of trades along with parallel backtesting of multiple currency pairs.
- More Timeframes: MT5 provides 21-time frame charts, 12 more than available in MT4, giving traders more opportunities to conduct in-depth analyses of their preferred assets.
- Market Depth: Traders can view the depth of the market, which provides a graphical representation of bids and offers for an underlying financial asset based on trading volume. This allows traders to execute trades at the best possible price.
- Economic Calendar: MT5 includes a comprehensive tab that displays news release schedules, impact levels, previous data, and market consensus.
- Netting Accounting System: MT5 supports the netting system that allows only one position to be held for a given financial asset.
- Wider Range of Tradable Assets: In addition to forex and CFDs, MT5 also allows trading indices, futures, cryptocurrencies, bonds, and options, with an expanded instruments list of over 1,000 assets compared to an average of 250 in MT4.
MT4 v/s MT5- Comparison
MetaTrader 4 (MT4) and MetaTrader 5 (MT5) are two of the most popular platforms for online trading.
They are both widely used by traders across the world and provide them with a range of trading tools and features.
Both platforms have different strengths and weaknesses, and it is essential to know these differences in order to decide which platform is best for you.
Let’s compare the key features of both platforms to help you make an informed decision.
- Algorithmic Trading
Algorithmic or automated trading is a process that allows traders to automate their entire trading process and place trades even when their computer is off. Both trading platforms support algorithmic trading, but differently. MT4 makes use of an order system to execute automated trading whereas MT5 auto trading implements a positional system that allows traders to carry their positions for comparatively longer periods.
MT5 is not an upgrade of the MT4 trading platform. They both serve different functions. While MT4 specifically focuses on forex trading, MT5 allows trading in multiple instruments like currencies, stocks, cryptos, indices and more. MT5 has some advantages over MT4, such as faster backtesting and depth of market functionality, which helps traders measure asset supply and demand.
Both platforms offer analytics to help traders place successful trades. The analytics help traders forecast asset price changes and make informed trade decisions. MT4 features interactive charts with 9 time frames whereas its counterpart also has interactive charts with 21 timeframes. MT4 offers 30 in-built indicators, and MT5 provides 38. Some indicators, such as the Fibonacci and Elliot tools, are only available on MT5, not MT4. MT5 also offers a highly versatile strategy tester, which allows traders to use their resources to test and optimise their trades.
Both platforms have an easy-to-use interface but with some differences. MT4 is simpler and easier to use, especially for forex traders, and allows traders to customise the interface as per their needs. MT5 is a little more complex as it includes more trading features and enables traders to trade stocks and futures markets. MT5 has a very simple interface, which includes 7 types of hourly charts, 11 types of minute charts along with 365 timeframes ranging from daily, weekly to yearly, which isn’t present in MT4.
Both platforms offer mobility, allowing traders to access their trades and account information from their mobile phones. MT4 and MT5 have mobile versions for Android and iOS devices. The mobile versions include charts, trading orders, analytics tools, and account information, enabling traders to access the markets anywhere.
7. Trading and Orders
Execution of trades is done in the same way in both platforms. Traders placing orders through a third-party platform and executing trades in real-time. MT4 includes three execution modes (request, instant execution, and buy market), and MT5 too has all these modes with an addition of execution mode called the exchange execution, which allows traders to send orders to an external trading exchange. MT4 includes four types of orders (buy stop, buy limit, sell stop, and sell limit), while MT5 offers the four orders available on MT4 and two additional orders (buy stop limit and sell stop limit).
8. Internal Mailing Systems
Both platforms have an internal mailing system that allows traders to communicate directly with their MT4 and meta trader 5 brokers and other traders. In MT4, this is known as the “Mailbox” feature, and it can be accessed through the “Terminal” window. In MT5, the equivalent feature is called the “Messages” tab and is located in the “Terminal” window.
Both mailing systems allow traders to send and receive messages as well as view sent and received messages. However, MT5 provides additional features, such as creating message templates and categorizing messages into different folders. This makes it easier for traders to manage communication and keep track of important messages.
In terms of security, both platforms use encrypted communication to ensure that sensitive information is protected during transmission. Additionally, traders have the option to enable two-factor authentication for added security.
9. Economic Calendar
MT4 does not have a built-in economic calendar, but traders can use a third-party calendar for tracking financial news. MT5 offers an integrated economic calendar with real-time information about macroeconomic events.
10. Programming language
Both MT4 and MT5 have their own proprietary programming languages, each offering different trading options and customization opportunities based on a trader’s needs.
MT4 uses MQL4, which is easier to use and requires fewer steps to set up, making it more suitable for beginner traders or those who don’t have a desire to create custom scripts or algorithms.
In comparison, MT5 is based upon a more advanced and complex programming language, MQL5, but also provides the ability to write or modify scripts.
It offers a more advanced trading experience, allowing trades to be executed with a single function, compared to the more manual approach of MT4.
MT4 or MT5, Which is Better?
The MT5, the newer version of the popular MetaTrader platform, offers several advancements compared to its predecessor MT4.
These advancements include more advanced charting and analytical tools, the ability to trade cryptocurrencies, and faster trade execution.
However, despite these enhancements, MT4 is still the preferred choice for many forex traders due to its ease of use and widespread availability.
If you’re interested in taking advantage of the advanced features offered by the MT5 platform, it may be the better option for you; otherwise, MT4 is a well-established and widely-used platform that is suitable for most forex traders.
Which is your favorite trading platform, let us know by commenting down below!