MetaTrader is an online trading platform that is popular in trading circles around the globe. Its purpose is to trade on commodity markets, Forex, stocks, etc. Like other electronic trading platforms, MetaTrader allows traders to see charts, stream real-time prices, as well as place orders with brokers.
Forex traders can choose to use any trading platform. However, this decision is closely linked with the Forex broker of choice because different brokers offer varying trading platforms.
Another issue is that while some brokers have compatibility issues with specific Forex trading platforms, they provide access to these platforms via the bridge that links the dealing system of the broker to the platform. If issues arise with the bridge, it could harm the trade execution as well as management.
A popular question for most traders is whether to use the MT4 platform or the MT5 platform. In this article, we will look at their differences to help you decide which one to choose.
What is MT4?
The MT4 trading platform is quite popular and was first released in 2005. It was designed to trade Forex and has grown to become the most popular trading platform for Forex traders around the world.
Most Forex brokers offer to trade via the platform directly or via an in-house connection, which may cause slightly higher commission costs. Also, since the platform has a way of handling positions, it didn’t meet the trading regulations for some stock exchanges. This prompted the creation of the MT5 platform.
What is MT5?
MetaTrader 5 was released about five years after MetaTrader 4. Contrary to popular belief, MT5 is not an improved and upgraded version of MT4. Basically, MetaTrader 5 is a trading platform and backtesting machine-like MetaTrader 4 and has the same graphical user interface. However, the two are completely different.
MT5 was created to allow traders to trade easily in non-forex CDFs. It offers additional features that are not available in the MT4 platform, and this makes it appealing to traders who are after improved functionality.
MT5 can trade other markets asides from Forex, including stocks and products. It is better for plugging into centralized trading exchanges. Stocks and commodities, unlike Forex, have to trade via centralized processes before fully legal exchange of ownership can occur.
During the time of development and release of MT5, it could be assumed that Metaquotes predicted a boom in retail stocks and commodities and manufactured MT5 to fit the market.
Difference Between MT4 and MT5
1. Compliance in no Hedging Rule
Another crucial difference in their design is the compliance with the USA's "no hedging rule" in MT5. The rule states that clients of US-based Forex brokers must operate on a first-in, first-out basis.
MT4 registers each trade separately and allows for individual management of all positions separately while MT5 automatically accumulates all positions.
For this reason, MT4 can handle hedging while MT5 can’t. This makes MetaTrader 5 platform suitable for US traders since they are legally prohibited from hedging. However, it may not be a good option for traders in other parts of the world who prefer MT4 because it allows hedging.
So, in summary, MetaTrader 5 was designed to capture the interests of non-Forex and US markets and to tend to their inherent needs far better than MetaTrader 4 could.
Another difference between the MT4 and the MT5 platform is in their programming language. While MT5 uses the MQL5 programming language, MT4 uses the MQL4 programming language.
A notable difference between these two programming languages is that MetaTrader 5 has a backtesting function while MetaTrader 4 does not. This function allows traders to run a test on programmed trading strategies much faster.
When it comes to programming, MetaTrader 5 also stands out because of its compatibility with multi-currency pair backtesting which speeds up backtesting procedures. With these two features, the MetaTrader 5 platform is an ideal choice if you want to do several backtests simultaneously within a short time.
Nonetheless, it is important to note that these two programming languages allow "black box" programming. This feature was introduced in the MQL4 Programming in 2014.
With black box programming, it is much easier to program the platform. This is beneficial for trading robot developers and users since it ensures a better framework
Something else that you should keep in mind concerning these two programs is that there isn't any backward compatibility. Basically, you can’t run programs written for MT4 on MT5. This is a disadvantage for traders who want to upgrade as switching from MT4 to Mt5 is not considered upgrading.
MT4 comes with 30 standard indicators that may be useful to most traders. Nevertheless, MT5 features 8 additional indicators that you can add to your platform.
MT5 supports multiple time frames while MT4 allows only conventional time frames. While MT4 has only 9 timeframes, MT5 has an additional 12 timeframes to give 21 timeframes which is no doubt a huge difference.
5. Type of Pending Orders
MT4 has four kinds of pending orders while MT5 has six.
6. Tick Data
There is a difference in how to tick data and 1-minute data is handled in both platforms. For instance, the data is downloaded manually in MT4 while the process of downloading and update is automatically done in MT5.
- MT5 has technical support while MT4 may not have technical support
- MT5 includes Depth of Market (DOM) while MT4 does not show DOM
- Unlike MT4, MT5 has an economic calendar
MT4 or MT5: Which is the Best Option for you?
Although both platforms are still great, there is no doubt that MT5 comes with new features that may be appealing to most traders.
Ultimately, MetaTrader 5 is the best option for you if:
- You trade stocks or multiple asset class
- You have to comply with the US’s no hedging regulation
- You do a lot of simultaneous backtesting and create automated strategies
- You need to get access to stock and or commodity exchanges that are harder to reach via MT4
Nevertheless, MT4 is still a better platform if you want to trade in the Forex market or CFDs. Plus, it is simpler and more popular than MT5 because it's easier to run and use. Furthermore, it has lesser glitches than its web-based competitors.
A Trader's Point of View
Most professional traders will say that all they need from the trading platform is reliability, ease of use, and running without crashing. Despite having limited features, most traders prefer MT4 because it functions well. It is a preferred choice for many because it lets them manage their trades and charts simultaneously.
Since the broker's choice is, in reality, more vital than the platform choice, platform-focused advertisements and MT reviews are mostly just ploys that are best ignored since almost every broker provides access to MT4.
MT4 vs MT5 FAQs
1. Which is Faster Between MT5 and MT4?
If you are after speed, MT5 is better than MT4. This is because it is a 64-bit platform and is multi-threaded, unlike MT4 which is a 32-bit platform and is mono-threaded.
2. Can an MT4 account work on MT5?
No, but you can switch from MT4 to MT5. Besides, there are several brokers that offer the MT4 trading platform which also offers the MT5 platform and permit you to switch or interchange.
3. What is the MT5 trading platform?
MetaTrader 5 is a popularly used trading platform for CFDs and Forex transactions. It has more strength than the MT4 platform and offers improved social and copy trading properties, such as backtesting and analytical functions.
4. Is the MT4 Trading Platform still active?
Yes. While MetaQuotes announced some years ago that they wouldn't support MT4 any longer, it remains available on their website for download and is still the most widely used trading platform.
5. Is MT5 an upgrade to MT4?
No, this is a common misconception that is far from the truth. Both platforms were designed for different purposes, and you can only switch, not upgrade, from MT4 to MT5.
6. How is MT4 different from MT5?
MT4 was designed to trade Forex while MT5 works best for those who want to trade in non-Forex CFDs. These two platforms have different programming languages, and MetaTrader 5 allows for faster backtesting than MetaTrader 4. MT5 also permits DOM and is practically supported by MetaQuotes, unlike its MT4 counterpart.
7. What is the best MT4 broker?
We believe that of the major brokers that offer the MT4 trading platform, FP Markets is the higher-ranking choice for most brokers.
8. Is MT5 any good?
In truth, MT5 is an exceptional trading platform that has higher-ranking capabilities and features compared to MT4. Some of the great features of this platform include backtesting and DOM. Nevertheless, most traders still have a preference for MT4 when given a choice.
9. Is MT4 a good trading platform?
Although MT4 is a relatively old trading platform, it's still popularly seen as the gold standard Forex-trading platform. Better yet, you can add modern addons to further maximize it.