MetaTrader 4 (MT4) vs MetaTrader 5 (MT5)

Category: Trading Platforms | Author: Trading Brokers | Date: January 5, 2023

The trading platform they utilize is an important choice for forex traders. However, as not every broker offers every type of trading platform, this decision is tied to the choice of Forex broker. Additionally, some brokers provide access to specific Forex trading platforms even though they are not truly compatible with them. Instead, they use a bridge, which is a piece of software that links the platform with the dealing system of the broker. This may perform effectively, but if the bridge has issues or is slow, it may have a negative impact on trade execution and management.

The trading platform known as MetaTrader 4 is widely used and is unquestionably considered to be the industry standard. Despite the possibility of somewhat higher spreads and/or costs, I have never met a Forex broker who does not either offer trading directly through the platform or through an internal bridge to the platform. Although it is made by the same business and is somewhat less popular, the MetaTrader 5 trading platform is still available. We must examine both of the MetaTrader platforms in more detail if we are to see why this is the case.

What is the MetaTrader platforms?

The MetaTrader 4 and MetaTrader 5 interfaces are certainly at least somewhat recognizable to you if you trade forex. Due in large part to the importance of its tools and resources when it comes to assessing positions and acting, these software solutions rank among the most popular trading platforms for a wide spectrum of traders and advisors.

Although their titles can give the impression that MT5 is simply MT4 updated, the truth is that these two solutions offer various features and capabilities that cater to various trading audiences. Your history and trading objectives, among other things, can affect your decision regarding which trading platform to employ (MT4 vs. MT5).

Here are some comparisons of different platforms and tips on how to pick the best one for you.

What is MetaTrader 4 (MT4)?

Forex and CFD traders really like the online trading platform MetaTrader 4. You can examine current exchange rates with MT4, do technical or fundamental research, automate trades using your own algorithms, and open or modify orders. Through MT4, you can also modify charts, orders, and more in accordance with your individual trading preferences.

MetaTrader 4 (MT4) Platform

MetaTrader 4 (MT4) Platform

What is MetaTrader 5 (MT5)?

You can trade stocks, foreign exchange, and futures on the multi-asset trading platform known as MetaTrader 5. It provides cutting-edge tools for algorithmic trading (using trading robots and expert advisors) and copy trading. MetaTrader 5 (MT5), which debuted in 2010—five years after MetaTrader 4—is regarded as being more advanced and diverse due to its improved charting, exclusive indicators, and ability to trade over 500+ markets, including forex, indices, commodities, stocks, cryptocurrencies, and equities—all through a single platform.

MetaTrader 5 (MT5) Platform

MetaTrader 5 (MT5) Platform

MT4 vs MT5: Comparing key features

Automated trading

By automating every step of the trading process, algorithmic trading enables you to make profitable transactions even when your computer is off and you are sleeping. Algorithmic trading is available in both MT4 and MT5, although in distinct ways.

  • On the basis of an order mechanism, MT4 carries out automatic trading. A positional system is implemented by MT5’s automatic trading feature, allowing traders to keep and carry a position for a longer length of time.
  • MT5 also lets you back test with tick data on multiple currency pairs at the same time, something that MT4 cannot do.

Functionality

Since they each perform a distinct purpose, MetaTrader 4 and MetaTrader 5 are not upgrades of one another. MT5 lets you trade in stocks, futures, and currency while MT4 is only intended for forex trading. However, MT5 is superior to MT4 in a few areas compared to the latter.

  • In comparison to MT4, MT5 includes speedier backtesting, which enables traders to examine how well an investment or trading strategy would have fared had it been applied to historical data instead of hypothetical results.
  • The depth of market capability in MT5 makes it possible to calculate the supply and demand for assets based on all active buy and sell orders.

Analytics

Both systems’ analytics are designed to place trades that are more successful. Analytics aids traders in selecting winning transactions for themselves and forecasts changes in asset prices.

  • Custom analytics are available in MT4 and MT5 to meet specific trading requirements.
  • In comparison to MT5, which has charts with a total of 21 timeframes, MT4 has interactive charts with 9 timeframes.
  • While MT5 has 38 built-in technical indicators, MT4 has 30 built-in indicators.
  • Only MT5 and not MT4 offers certain indicators, such as some Fibonacci and Elliot tools.
  • MT5 provides 44 graphical components compared to MT4’s 31.
  • Both systems offer traders constant access to financial news and have an alert feature.
  • Additionally, MT4 lacks an economic calendar, whereas MT5 does. This makes it possible for MT5 to provide traders with macroeconomic news from across the world that could affect their financial trading decisions.
  • Only MT5 provides a multithreaded strategy tester that enables traders to test and optimize transactions using the entire computing power.
  • The MT4 platform does not include an inbuilt community chat or the ability to transfer money between separate accounts, which are both features supplied by MT5.
  • Over 2000 homemade indicators and 700 purchased indicators are included with MT4.
  • You can open as many charts as you need in MT5.

Interface

There are a few variations between MT4 and MT5, however both feature an intuitive interface:

  • Comparatively speaking, MT4 is simpler and easier to use, particularly for FX traders. It enables traders to alter the platform’s user interface to suit their particular trading requirements.
  • Because it has additional trading tools and lets users trade the stock and futures markets, MT5 is a little more complicated.
  • Although MT5’s user interface is more straightforward, it offers 11 different types of minute charts, seven different types of hourly charts, and 365 daily, weekly, and annual timeframes, some of which are not present in MT4.

Mobility

By allowing you to access all of your buy and sell orders through a mobile phone, the mobility feature on both platforms enables you to constantly be close to your trading system.

  • Mobile versions of MT4 and MT5 are available for iOS and Android smartphones and tablets. You can use this functionality all day long to access the markets from anywhere in the world.
  • Charts, all trading orders, analytical tools, and the ability to check the status of your accounts are all included in the mobile edition. All of your financial instruments can be bought and sold, exactly like they would on a computer system.
  • Mozilla Firefox, Google Chrome, Apple Safari, Microsoft Edge, Opera, and Internet Explorer are all compatible with MT4 and MT5.

Orders and Trading

Both the MT4 and MT5 platforms have a nearly identical execution strategy. Orders are placed on MT4 and MT5 using a third-party platform, and trades are carried out instantly.

  • The execution on request mode, instant execution, and execution purchase market are all available in MT4.
  • You can also transmit orders to a third-party trading exchange using MT5’s alternative execution option known as “exchange execution.”
  • Buy stop orders, buy limit orders, sell stop orders, and sell limit orders are the four different types of orders available in MT4.
  • The buy stop limit order and sell stop limit order are two additional orders in addition to the four that MT4 offers.

Internal mail services

The broker can provide a trader with crucial and pertinent information via an internal mailing system. Information on the platform features, open accounts and orders, forthcoming events, and much more are all included. Emails containing the information are sent to the platform and are displayed on the Mailbox tab.

  • Although the core messaging systems of both platforms are similar, MT5 also includes an attachment feature.
  • Only emails sent through MT4 and MT5’s internal mailing system can be sent to the trading server’s administrators.

Netting and Hedging

Hedging is a form of risk management tactic that enables you to open a position opposite to your present position in order to offset any potential losses. On the other hand, netting involves merging various financial responsibilities to arrive at a net obligation amount in order to reduce financial risks in contracts.

  • You can hedge your transactions with MT4 to guard against possible losses.
  • You can hedge and net your trades using MT5, lowering your financial risk and safeguarding you from potential losses.

Brokers

Even while both MT4 and MT5 offer a variety of indicators, research tools, and analytical tools, there is a significant variation in the number of brokers available on the two platforms.

  • Since online brokers favor MT4 over MT5, there are more than 1,200 MT4 brokers on the market.
  • Comparatively few MT5 brokers exist compared to MT4.
  • Few brokers offer both platforms, allowing you to alternate between MT4 and MT5 as you see fit.

API FIX Access

To access real-time financial security information in the financial markets, traders use the Financial Information Exchange API (FIX API). The FIX API is used by traders and market regulators to exchange data both before and after a trade is conducted. Through the FIX API, information about executed traders and fresh orders is also transmitted.

  • You can build private algorithms and strategies that aid in the analysis of forex trades using MT4’s FIX API interface.
  • A FIX API integration is not accessible to traders using MT5.

Coding language

A programming language is a computer language established by programmers to communicate with computers. This facilitates the output of machine code and promotes seamless platform operation. Both MT4 and MT5, which each have distinct modifications and trading capabilities, are designed using their own unique programming languages.

  • Because MT4 is written in a programming language, it is ideal for new traders who do not have much experience developing their own algorithms for trading strategies.
  • The trading software can be created using MT4’s programming language in a few simple steps.
  • MT5, on the other hand, is based on a somewhat more complicated programming language that gives users the ability to create custom trading strategies, edit scripts, and perform sophisticated trading analysis.
  • MT5 allows trades to be executed using a single function, unlike MT4, which does not allow this.

Practice Trading

Through the use of trial trades, traders can test the platform’s functionality without risking any real money. It functions in a similar manner to real trading, with the exception that no money is exchanged, and it gives you a genuine impression of how to use the platform’s various features.

  • Demo trading is available on MT4 and MT5, giving traders a completely risk-free environment.
  • To use an MT4 or MT5 demo account, you only need to register a real account with a legitimate financial broker.

What are the main differences between MT4 and MT5?

In addition to the main distinction between the two platforms, MT5 also gained a lot of new features. While MT4 offers four different types of pending orders, MT5 adds two more pending order types. These enable conditional orders to have constraints imposed on them. Stop-loss orders are now more under your control as a result.

MT4 only offers 9 timeframes, but MT5 has 21 possible periods. The nine periods that come with MT4 are pretty common. 2, 3, 4, 6, 10, and 20-minute charts as well as 2, 3 and 6-hour charts are now available in MT5. The strategy backtesting in MT5 is much more sophisticated. Since it has several threads, it can perform several simulations at once. This is a significant advantage for anyone developing automated techniques. Additionally, 1-minute data is treated differently from tick data. With MT4, you have to manually download this data. It automatically downloads and updates in MT5. On MT5, stock traders can get time and sales data that is pertinent.

Even though MT4 has the majority of the necessary standard indicators, MT5 adds 8 more. Since you may download and add whatever indicator you require to either platform, this difference is not particularly significant. A number of additional analytical objects to recognize cycles and trends are also included in MT5. The fact that MT5 makes it simple to trade several asset classes, with numerous accounts, and utilizing more than one currency may be the most significant distinction, aside from order and position processing. Additionally, you can create multiple trading accounts with MT5 and then move money between them.

Is MetaTrader 5 better than MetaTrader 4?

Yes, MetaTrader 5 is superior to MetaTrader 4 since it provides a wider variety of trading features. Additionally, it provides more instruments for predicting market movement and a faster processor, which improves the efficiency of trading. The fact that traders can manage all of the assets in their portfolio, including CFDs, stocks, and forex, on a single platform makes MT5 superior to MT4.

For stock trading and related order management procedures, the new MT5 edition is a potent piece of software with enhanced facilities. The MT4 platform, on the other hand, includes more robust tools and capabilities that can be used for FX trading. Because of the minor differences between MT4 and MT5, MT5 is overall a more robust and effective program.

Although the new MT5 version is undoubtedly more effective and powerful than MT4, it cannot completely replace MT4 because these two platforms are employed for different things. MT5 gives you access to trade several financial assets, including forex, equities, commodities, cryptocurrencies, and indices, whereas MT4 is just designed for currency trading.

Is the MT4 or MT5 platform better for me?

Analyzing the variations in their characteristics is crucial in determining whether MT4 or MT5 is more appropriate. Since MT5 is an advancement of MT4, we would initially believe that it is better than the latter, but the truth is that it depends on our demands.

Due to its simplicity of use and capacity to accommodate any sort of investment, MT4 was published in 2005 and swiftly rose to become one of the most well-known platforms in the world. MT5 was then released in 2010. Since it was created with more options and features, making it more complete but also better suited for trading in markets other than Forex, MT5 is not a straight evolution of MT4, but rather an alternative.

The answer is generally MT5 if you’re wondering which platform is better or more appropriate for your purposes, although this isn’t always the case. If you know you’ll only be trading FX and CFDs and want to keep things as straightforward as possible, MT4 is your best bet. It is an easy platform to use and understand.

The best trading platform for you might be MT5, especially if you trade stocks or other asset classes. MT5 is likewise your best option if you are undecided. You wouldn’t want to learn to use MT4 just to discover that you need to learn MT5 as well because you want to trade equities. Although MT5 has a slightly higher learning curve, you will have access to more features and possibilities.

Conclusion: which MetaTrader platform is the best?

Both MT4 and MT5 were developed with unique aims in mind. Both of them are appropriate for various types of traders because they are not mutually dependent on one another and are not enhanced versions of one another. MT4 is the best option for you if you are a novice trader who merely wants exposure to the forex market. However, MT5 is the best option if you are an experienced trader who wishes to trade other markets as well. Please feel free to take a look at our best MetaTrader brokers if you need some inspiration.


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