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MetaTrader 4 vs MetaTrader 5


The MT4 and MT5 platforms are two of the world’s leading trading platforms, used by a majority of traders worldwide. Released by MetaQuotes in 2005, MetaTrader 4 has gone on to gain widespread popularity among millions of global forex traders. It is widely considered one of the easiest currency trading platforms to use in the online retail forex market. Its remarkable simplicity combined with robust trading tools is what appeals to all types of traders, regardless of expertise.

Launched in 2010, MT5 is a multi-asset trading platform. Where the MT4 platform was built with forex traders in mind, MT5 offers broader applications to accommodate a larger scope of more complex asset trading. This includes forex, futures, options, stocks, and bonds.

Commonalities between the MT4 and MT5 trading platforms

As far as usability and architecture is concerned, MetaTrader 4 and MetaTrader 5 are comparable:

Key differences between MT4 and MT5

While the MT4 and MT5 trading platforms have many similarities, it’s the differences that determine the types of traders they each attract.

Analytical functions

The analytical functions of both platforms are some of their strongest features, enabling traders to quickly detect market fluctuations and make informed trading decisions.

Trading and order types

The MetaTrader 4 trading system offers 3 execution modes, as well as two market orders, 4 pending orders, 2 stop orders, and a trailing stop. In contrast, the MetaTrader 5 trading system provides 2 position accounting systems, Advanced Market Depth, 2 market orders, 6 pending orders, 2 stop orders and a trailing stop.

MT5 Depth of Market

MT5’s depth of market (DOM) feature allows traders to view where bids and asks for a particular instrument are priced across markets (current best prices, closest to the market). The DOM differs on the exchange and OTC markets.

MT5 position accounting systems

The 2 position accounting systems supported by MT5 are Netting and Hedging. The choice of system is dependent on the account and is established by the broker. While hedging can be used for trading forex (and is accommodated by MT4), the netting mode is adopted on exchange markets. The netting system allows a trader to have just one open position of a financial instrument at a time, but the volume of that position can be increased or reduced. With hedging, a new deal on a financial instrument opens a new position.  Stop loss and take profit levels can be defined for each open position.

Algorithmic trading

One of the most innovative qualities of both MetaTrader 4 and MetaTrader 5 is algorithmic or automated trading. This capability gives traders the ability to develop and apply Expert Advisors (trading robots) and technical indicators. Most trading strategies can be applied using trading robots (EA).

How the two platforms differ is in the programming language they use.

Trading robots

A trading robot (EA) is a software program used for price analysis and executing trade transactions using technical signals based on specific criteria. The appeal of EAs is that they remove emotive (human) influences from trading which could negatively influence trade decisions.

Risk: While algorithmic offers speed and accuracy in regard to executing trades, there is still a level of risk involved. A proper risk management strategy remains key in mitigating large capital losses, regardless of the efficiency that algorithmic trading offers.

Backtesting

Both MetaTrader 4 and MetaTrader 5 offer backtesting. This feature allows traders to test trading strategies using historical market data. It assesses the viability of the strategy, after which a trader can apply it later in their own trading practices. The MT5 trading platform is said to allow for faster backtesting than MT4.

Conclusion

Choosing between MT4 vs MT5 ultimately comes down to personal choice and trading objectives. Analyse both solutions to determine which one best serves your trading needs. For a trader that lacks the necessary trading skills or expertise, or for those looking to trade forex or CFDs, the resourcefulness and simplicity of MT4 may be preferable. Alternatively, a more advanced trader may be drawn to the additional features offered by the MetaTrader 5 trading platform. Wherever you are in your trading journey, choose the platform that will help you meet your trading goals.

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