Reading time: 8 minutes
As a leading software developer for brokerages around the world, MetaQuotes Software Corp. dominates the retail foreign exchange industry (often referred to as the Forex market).
Established in 2000, the release of MetaTrader 4 (MT4) in 2005 was considered a turning point for the company and remains a popular trading platform. Five years on, MetaQuotes took things to another level, releasing MetaTrader 5 (MT5), a multi-asset trading platform which allows for not only trading Forex (think Forex trading, Forex traders and currency pairs), but also exchange traded financial instruments as well. However, with FP Markets, and most other Forex brokers, MT5’s financial instruments are based on CFD pricing.
Both online trading platforms deliver revolutionary features and boast similar presentation, arming traders and investors with up-to-date trading tools. Yet, which platform offers the more superior trading experience remains a subject of debate.
Trading Platform Features
- Different Timeframes:
Traders are free to work with 21 timeframes on the MT5 platform, while MT4 offers 9 different timeframes (see figure 1.A).
Having access to more timeframes can benefit price action traders, helping to dissect price action. Therefore, MT5 appeals in this case.
Though for swing traders and longer-term investors, standard timeframes provided on the MT4 platform are normally sufficient.
(Figure 1.A—MT5 and MT4 timeframes)
- Technical Charting Tools:
Plumbers, as you can imagine, are lost without their trusty pipe wrench, and a carpenter may struggle to work without a wood saw. The same is said for traders. Among technical analysts, technical tools help navigate charts to establish a framework to base trading decisions. These include traditional drawing tools (analytical objects), such as trendlines, horizontal support and resistance and rectangles to form supply and demand zones. Technical indicators are also popular, such as moving averages, the relative strength index, or RSI, and the Average True Range, or ATR.
Most retail investors operate successfully with a handful of technical tools. So, despite MT5 offering 40 different built-in technical indicators and MT4 delivering access to 30 indicators, the choice between MT5 or MT4 is unlikely to be a concern here. The same can be said for MT4 offering access to 24 drawing tools, while MT5 has more than 40 drawing tools available. Most are able to function with a limited number of technical drawing tools, so either platform is likely sufficient in this case.
- Order Types:
To enter and exit the market, traders require different order types found within the platform’s order windows (see figure 1.C).
For instance, breakout systems tend to adopt buy and sell-stop orders to enter the market. A buy-stop order is positioned above current market price and is filled if the ask price tests the order level. A sell-stop order is the mirror opposite—positioned beneath current market price and is triggered if the bid tests the order level.
For MT4, 2 market orders are available, along with 4 different pending order types (buy stop, buy limit, sell limit and sell stop), 2 stop orders and a trailing stop. MT5 takes it a step further and offers 6 pending orders rather than 4 (buy-stop limit and sell-stop limit).
Overall, as you can see, there’s not much difference. Either MT4 or MT5 is likely adequate in respect to order types.
- Depth of Market:
Both MT4 and MT5 users have access to depth of market functionality (DOM— see figure 1.D), however there are differences.
MT4 users can manage entry and exits from the DOM without showing a trading dialog. Though, the MT4 DOM is simply an entry system, void of available liquidity.
With MT5, nevertheless, the DOM displays available bid/ask prices—the volume space shows liquidity. For example, 1.00 represents 1 standard lot of available liquidity. For the majority of cases this represents broker liquidity.
(Figure 1.C—MT4 and MT5 order types)
(Figure 1.D—MT4 and MT5 Depth of Market)
- Automated Trading:
MetaQuotes Language 4, or MQL4, and MetaQuotes Language 5, or MQL5, are programming languages in place to serve traders that require automated trading facilities.
Understanding the programming languages allows traders to code Expert Advisors (EA)—sometimes referred to as Trading Robots—for just about any trading strategy. This also provides traders a platform in which to design custom indicators.
- Many users believe MQL5 to be the more efficient program.
- MQL4 code cannot be transferred into MQL5.
- The MetaTrader market boasts the largest online store of technical indicators.
With the above in mind, traders familiar with MT4’s functions tend to stick with MT4.
- Mobile Trading:
Both MT4 and MT5 mobile applications permit trading via iOS and Android-powered smartphones and tablets. Consequently, in terms of mobile trading, both MT4 and MT5 are viable options.
Having the ability to trade on the go, particularly for those unable to be at the screen during the trading day, is a clear benefit.
- Strategy Tester:
Unlike MT4’s platform, which works with a single threaded strategy tester, MT5’s strategy tester is multi-threaded. This means backtesting trading strategies in multiple markets simultaneously is available.
- Economic Calendar:
MT5 houses a built-in economic calendar (see figure 2.A), delivering macroeconomic news from different countries.
As a result, those who follow macroeconomic events will find this of use and may have some traders lean towards MT5’s software.
(Figure 2.A—MT5 Economic Calendar)
MT5 Vs. MT4
Whether MT5 is better than MT4’s trading software is trader dependent, i.e., it depends on the trading system—technical analysis or fundamental analysis—and trading style.
Traders working with several trading systems that focus on exchange traded instruments would, of course, favour MT5, for example. Price action swing traders who trade Forex, on the other hand, are unlikely to require MT5’s facilities and will, therefore, prefer MT4.
Why not consider test-driving FP Markets demo accounts on MT4 and MT5 before making a decision? FP Markets offer immediate access to the financial markets (including indices and cryptocurrencies) with real-time pricing and 24/5 support in multiple languages.
Disclaimer: The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives are complex instruments can be high risk; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.