Everybody who trades forex has heard of MetaTrader. Nine out of 10 brokers offer MetaTrader 4 (MT4) on their servers as the trading platform of choice and many have adopted the follow-up platform, MetaTrader 5 (MT5). Both are award-winning trading platforms that offer advanced features and incredibly fast execution.
Now people are asking which is better, “MT4 or MT5?”
The simple answer to this question is that the developers, MetaQuotes Software, designed them with different purposes in mind. And even though they come out of the same stable, they aren’t really meant to compete against each other.
MT4 was designed to trade forex while MT5 was designed to trade a wider range of assets. This includes stocks, commodities, futures, and indices. Some traders use MT4 for non-forex instruments but its primary purpose is seamless forex trading.
In this in-depth guide you’ll learn:
- Which is best? MetaTrader 4 or MetaTrader 5
- How MetaTrader 5 works
- Development of MT5
- METATRADER 4 versus METATRADER 5
- The Future of MetaTrader 4
And lots more…
Let’s dive right in…
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Which is best? MetaTrader 4 or MetaTrader 5
The question really is, “what do you need from a trading platform?”
Both award-winning trading platforms offer superior functionality for high-frequency mobile trading. They offer a simple interface that is easy to use and customize with advanced software to place buy and sell orders, charts, technical and fundamental analysis, and backtesting EAs.
The big difference is MT4 was created primarily for forex trading while MT5 was created as a multi-asset platform to trade a wider range of assets. This includes stocks, commodities, futures, and indices.
MT4 has always been the best platform for new forex traders or investors who are only interested in trading forex. MT5 offers more versatile software with additional features that appeal to traders who are trading more financial instruments at a more advanced level.
MT5 offers additional features such as double the timeframes, two extra pending orders, eight additional indicators, depth of market, and an economic calendar. It also accommodates the netting system as well as the hedging system while MT4 only offers to hedge.
MT4 uses MQL4 which is used to develop trading programs based on the order system. MT5 uses the more versatile MQL5 which is used to implement the positional system.
The difference is MQL5 is more efficient and easier to use where trading operations are done by sending trade requests using just one function. Traders can also write and alter scripts with MQL5. MQL4 requires multiple functions to perform each trade.
One of the biggest frustrations leveled at MetaTrader is programs for MT4 cannot run on MT5. In other words, you can’t trade with your MT4 trading account using an MT5 platform. You need to open an MT5 account to trade with MT5. This means EAs that are coded to work on MT4 will not work on MT5.
How MetaTrader 5 works
MetaTrader 5 was developed by MetaQuotes Software Corp. and launched in June 2010. It was brought to market after three years in development and exactly five years after MT4 was launched and went viral. The development of MT4 took only 20 months.
Riding on the back of the incredible success of MetaTrader 4, the market no doubt saw MT5 as a ramped-up version of MT4. Much like what the E-class Mercedes Benz was to the C-class.
But MT5 wasn’t designed to be a new and improved version of MT4. It was created to broaden MetaTrader’s functionality from being a single-market trading platform to a multi-market platform, offering traders an advanced trading platform for a far wider range of financial instruments.
Development of MT5
MetaQuotes Software started from scratch with MT5 and over three years, the developers wrote 1.1 million code lines for MT5. To compare, MT4 consists of 0.6 million code lines. As you can imagine, the results were extraordinary, offering the trading market a new level of distributed trading, high performance, and flexibility.
MetaTrader now had in its stable an extremely powerful terminal for developing Expert Advisors using MetaQuotes Language 5 (MQL5). It was by no means a bigger and better version of MT4 but a new-world trading platform the trading world hadn’t seen before.
MetaQuotes Software didn’t launch MT5 before they had subjected the trading platform to severe testing within the company. Instead, the company launched a programme of multi-state testing; starting with closed testing in-house and then public testing in the MQL4 community.
Once the developers had addressed over 1 000 bug reports and crash logs and released about 150 builds of the MetaTrader 5 Client Terminal, MetaEditor, and MQL5; MT5 was deemed stable and ready for market.
MetaQuotes Software went one step further and held a 3-day workshop in 2009, inviting representatives of brokerage companies from around the world to test the new platform and brainstorm how it could be improved further.
Today, what you have in MT5 is a revolutionary software program designed for financial markets. It retains the basic functions that made MT4 the leading trading platform but offers advanced features and functionality for powerful automated trading. Brokers and traders have adopted MT5 as the best trading platform to operate in various currency and equity financial markets.
MetaTrader 5 is a multi-asset trading platform that allows investors to trade in forex, stocks, and futures. It offers superior tools for trading, comprehensive price analysis, algorithmic trading applications (Expert Advisors), and copy trading (Trading Signals).
MT5 offers advanced tools for algorithmic trading on a wider range of financial instruments than MT4. This includes options futures, stocks, and commodities.
Automated trading or algorithmic trading is also referred to as trading robots. These nifty robots can analyze quotes of financial instruments in rapid time as well as execute trade operations on forex and other financial instruments.
MT5’s trading robots are developed in a specialized integrated environment known as MQL5 IDE. This development environment covers the entire cycle of trading application development which allows traders to create, test, debug, optimize and execute trading robots.
Order execution modes
MT5 supports four order execution modes: instant, request, market, and exchange execution.
Order execution is the completion of a buy or sells order for a financial instrument. The investor or trader submits the trade position which is then sent to the broker. The broker determines the best way for it to be executed.
Order execution is where the MT5 trading platform automatically adds the current prices to the order. Brokers either accept the price and the order is executed, or they reject it and it is canceled. For order executions, brokers decide to execute or reject an order execution price without discussing it with the trader.
MT5 offers all types of orders on the trading platform, including market, pending, and stop orders. It features One-Click Trading and provides functions for trading straight from the chart.
Its copy trading functionality is marketed under the brand name Trading Signals. It’s a trading service that allows automatic real-time copying of trading operations from one trading account to another.
This copycat service is useful because many brokers provide public access to the deals they execute for free or for a reasonable fee. When a trader subscribes to these signals, the same deals are automatically executed on their accounts.
Expert Advisors (EAs) are algorithmic trading applications. It’s a method used in trading to execute orders, using automated pre-programmed trading instructions. EAs take into account variables such as time, price, and volume.
EAs were created to make use of the speed and data processing advantages that computers have over human traders. They are like your personal trading robot that automatically opens and closes trades for you so you don’t have to sit at the computer 24/7.
MT5 uses the powerful MQL5 language with an integrated development environment. The MQL5 Wizard allows traders to create fully-operational EAs based on the standard library available on the trading platform.
MT5’s Strategy Tester is a multi-currency tool. It allows you to test and fine-tune trading strategies before using them for live trading. These are trading strategies presented by the EAs.
An EA with the initial trading parameters is run several times through the Strategy Tester application with different sets of parameters. The result is the trader can select the most appropriate combination based on the test results.
The multi-currency tester allows traders to test and improve multiple financial instruments. It automatically processes information of all the symbols used in the trading strategy which means you don’t have to manually list them for the test.
MT5’s Strategy Tester is also what is known as multi-threaded. This means it can be used on all available computers and mobile devices used by the trader. Testing and optimization are performed using special computing agents that are installed on the MT5 trading platform.
There is no limit to the number of remote agents that can be connected to the Strategy Tester. The tool can access the MQL5 Cloud Network which gathers thousands of remote agents from around the world. The computational power of the network is available to all MT5 users.
MT5’s Strategy Tester is also used to test the operation of custom indicators in the visual mode. This allows traders to easily test the operation of demo versions of indictors that are downloaded in the financial trading market.
The codeBase of free trading robots
MT5 offers Code Base which is a free source code library of Expert Advisors (EAs) and indicators. These free source codes can be accessed straight from the MT5 trading platform as free applications for automated trading.
Each time you download free source code, it’s automatically compiled on the platform. A ready-to-go application is created and saved in the appropriate directory depending on whether it is an EA, indicator, or script.
The software is then added to the Navigator and is ready to be run on a chart. Navigator is the user interface on MT5 which traders use to access all the tools they need to trade the financial instruments, including various menus, toolbars, and service windows.
Netting and hedging
MT5 supports two position accounting systems for netting and hedging. MT4 only supports hedging.
Netting involves offsetting the value of multiple positions or payments due to be exchanged between two or more parties. It’s used to determine which party is owed remuneration in a multi-party agreement.
Hedging is used to offset the risk of adverse price movements in trade deals. It’s not a trading strategy used to make money but rather, it’s used strategically to reduce potential loss.
MT5 provides 82 different analytical tools. These are used to analyze currency and stock prices, including technical indicators and graphical objects.
The analytical tools are not limited to built-in indicators. Traders can also use MT5’s free Code Base of technical indicators and the Market of trading applications.
Besides, MT5 offers 21 timeframes, from a minute to a month. These time frames are available on all the financial instruments that you can trade with MT5. Up to 100 charts of different financial instruments can be open at the same time.
MT5 offers advanced tools for technical analysis in an all-in-one package. You can open up to 100 charts of currency pairs and stock quotes at a time with 21 timeframes for comprehensive detailed technical analysis of the smallest price movements. That’s more than double the number of timeframes MT4 offers.
Traders can choose between thousands of free-of-charge indicators from the Code Base or purchase/rent applications from the MetaTrader Market where they have access to over 2 500 readymade algorithmic applications and custom indicators created by professional programmers.
The MetaTrader Market is a secure service that traders can access to buy a range of trading robots, technical indicators, and scripts. It’s the largest trading application store in the world.
Professional traders publish their custom indicators on the MQL5 Freelance platform. You can order a custom application from over 650 developers. If you can’t find a trading application on MT5 that suits your trading needs, you can have one developed by a freelance programmer.
MQL5 Freelance is a convenient service that links traders with programmers who build custom robots of any complexity. All you do is create an order, add a detailed requirements specification and indicate the desired time limits and how you will pay the freelance program. The order for a custom indicator is then published on Freelance and the programmer’s quote on the job.
Fundamental analysis is an essential component of trading and MT5 provides excellent tools that can be used to forecast and analyze price movements on financial instruments.
Fundamental analysis allows traders to constantly monitor various open-source economic and industrial indicators. This original fundamental data is available direct from MT5.
Up-to-date news reports from international news agencies are broadcast daily on the MT5 platform. The economic calendar features the main macroeconomic indicators of different countries which are analysed to determine their impact on various financial instruments.
An economic calendar provides detailed descriptions of macroeconomic indicators, their release dates, and degrees of importance. Relevant values of these indicators are published on MT5 in real-time and displayed in charts as tags. This allows traders to visually track the macroeconomic indicators by countries, currencies, and by their level of importance.
The economic calendar on MT5 is invaluable. It allows traders to auto-analyze incoming events and prioritizes them by importance.
METATRADER 4 versus METATRADER 5
MetaQuotes Software offers two dynamic trading platforms. Both MT4 and MT5 are incredibly fast and offer a wide range of trading tools and features.
MT4 is designed for CFD forex instruments while MT5 is an advanced multi-asset trading platform for centralised and non-centralised financial instruments such as forex, stocks, futures, indices, and commodities.
Shared features of MT4 and MT5 include:
MT4 and MT5 are available via iOS and Android-powered Smartphones and tablets as well as desktop computers. This means traders can access their trading platforms from anywhere in the world 24-hours a day.
MetaTrader’s analytics tools are probably its strongest asset. Traders can customize their user interface to suit their trading needs and access interactive charts in up-to-the-minute timeframes. The difference is MT4 offers 9 timeframes and MT5 offers 21 timeframes.
MT4 offers traders 30 built-in indicators. MT5 offers 38 indicators.
MT4 offers 31 graphical objects while MT5 offers 44. MT5 provides additional indicators with more Fibonacci studies and Elliot wave drawing tools.
Both trading platforms offer alert functionality with audio as well as the latest financial news. MT5 offers the addition of an economic calendar. The economic calendar is attached to the bottom of the chart in the form of a small, trendy time function.
A key difference is MT5 offers Depth of Market (DOM) which allows clients to view where bids and offers are priced across markets.
MQL trading language
MT4 and MT5 use an automated trading system known as trading robots. MT4 uses MetaQuotes Language 4 (MQL4) and MT5 uses MetaQuotes Language 5 (MQL5). These built-in programming languages are used by freelance programmers to build EAs and custom indicators.
A point of difference is systems coded with MQL4 are not compatible with MQL5 programs.
Another key difference relates to the trading system setup. MQL4 is used to develop trading programs based on the order system while MQL5 is used to implement a positional system.
MQL5 is regarded as more efficient and easier to use than MQL4. MQL5 is a more compact language and requires fewer functions to complete trader orders.
Order execution modes
The order execution modes are almost the same for MT4 and MT5. They both offer instant execution, execution on request, and execution by market. MT5 offers an additional mode for exchange execution where orders are sent to an external trading system such as an exchange.
MT4 has four order types: buy stop, buy limit, sell limit and sell stop.
MT5 has the same plus two additional orders, namely buy-stop limit, and sell-stop limit.
MT5 offers partial edit options for trade positions. This feature is not available on MT4. Partial edit options are where a trade that becomes available with maximum volume is executed (not exceeding the volume requested in the order) and unfilled volume is canceled.
Hedging and netting
Netting is used for the stock market and allows a trader to open one position in any direction for one instrument. Hedging allows traders to open as many positions as they want in different directions.
MT4 only permits hedging while MT5 permits both hedging and netting. This is because MT4 was developed primarily for CFD forex trading and MT5 was developed as a multi-asset trading platform, covering centralized and non-centralized financial markets.
High-frequency trading (HFT)
MetaTrader designed their platforms for high-frequency trading. It’s a method of trading that uses powerful computer programs to transact a large number of orders in fractions of a second. It’s generally thought that the faster your execution speed, the more money you’ll make on automated trading.
MT4’s high-frequency trading capacity is not as fast and as efficient as MT5. This is because MT4 is only a 32-bit, mono-threaded platform while MT5 is a 64-bit, multi-threaded platform.
Single or mono-threaded processes involve the execution of instructions in a single sequence. This means one command is processed at a time. Multi-threaded processes allow the execution of multiple parts of a program at the same time.
MT4 and MT5 both offer advanced charts for analysis of price movements to track opening, high, low, and closing prices in time periods.
A big difference between the two MetaTrader trading platforms is MT5’s chart functionality is much wider than MT4. With 21 timeframes, MT5 supports more than twice as many chart periods as MT4 which offers 9 timeframes.
MT5 supports three types of charts; a broken line, a sequence of bars, and Japanese candlesticks. These can be set up in different colors per line item.
MT5 has a dynamic advantage over MT4 in terms of storing and passing price data. Where MT4 transmits data separately to the terminals on different timeframes, MT5 transmits and stores data in the form of one-minute bars. Higher timeframes can be built on the trading platform based on the one-minute bars.
MT5’s storage and data functionality allow traders to substantially save trading traffic because the history is downloaded only once as opposed to separately, and applies to all periods.
MT4 offers the option of 31 graphical objects and MT5 offers 44.
Graphical objects are analysis tools that help to identify financial instrument price trends to detect trading cycles and trends as well as support and resistance levels.
Strategy Tester is an application that allows traders to backtest EAs and optimize order execution modes.
MT4’s test feature works as a single thread while MT5’s is multi-threaded and multi-currency with real ticks.
Internal mailing system
Both trading platforms contain an internal mail system. This allows traders to receive important information from their brokers which include updates on open accounts, platform features, and upcoming events. The mail is displayed in the Mailbox tab on the trading platform.
The only difference between the two is MT5 offers this mailing service with attachments.
MT5 offers an embedded MQL5 community chat feature. This allows traders to communicate with each other on the platform. It’s a unique service for users of MT4 and MT5 trading platforms but the chat facility is only available via MT5.
The community service offers traders the opportunity to trade strategies and discuss MQL-related programming issues. It also offers news feeds on MQL language descriptions, articles on a wide range of trading topics, and a forum to network with like-minded traders.
The Future of MetaTrader 4
The massive success of MT4 has made it difficult for MetaQuotes Software to supplant the original trading platform with its advanced multi-asset software. Traders find MT4 very simple and easy to use and are comfortable trading forex on the platform.
T4 has already been installed by millions of traders around the world so brokers find it difficult to persuade their clients to switch to MT5. This is exacerbated by the issue that MT4 accounts and EAs cannot be run on MT5.
One of the main issues identified by the market experts is MT5 was developed to benefit the middleman. In other words, the broker. The improvements do little for the average man-in-the-street forex trader.
MetaQuotes Software has tried its best to “kill off” MT4 but the forex community refuses to let it die. The software company no longer allows new brokers to offer MT4 and has removed the simplest version of MT4 entirely. MetaQuotes has also discontinued support for MT4, sending a clear message to the trading world that MT4 is out and MT5 is in.
MT5 is better than MT4. It offers more financial markets and more features. To encourage the conversion from MT4 to MT5, MetaQuotes Software has also priced MT5 as more affordable than MT4.
Despite all this, MT4 is alive and well and not likely to disappear off the forex trading radar for a long time to come. MT4 is the leading trading platform and its viral success has created a bit of a headache for its creators.
Three years of development incorporating the most advanced features and endless testing have created a phenomenal trading platform for the modern market but MT4 refuses to disappear.