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Today’s society is fast-paced and constantly evolving.
Having the ability to make decisions is an imperative skill in all professions, particularly in trading and investing. In fact, one of the greatest challenges retail traders and investors face is choosing a suitable trading platform.
Although proprietary trading platforms are available through most brokerages, two remain favoured among the retail trading community.
MetaQuotes Software Corp. has established itself as a leader in software development since 2000, delivering a series of trading platforms. MetaTrader 4, or ‘MT4’, e MetaTrader 5, or ‘MT5’ are acknowledged across the board as industry-leading trading platforms, providing an efficient gateway between traders and financial markets.
The challenge, however, is selecting which MetaTrader platform to work with.
MT4 vs. MT5: Key Features
- Platform Design
Although the MT5 platform was launched five years after MT4’s release, differences in the platform’s layout is negligible.
However, many MT5 users claim the platform offers a smoother operation.
Most traders recognise that different trading styles require different timeframes.
Short-term day traders and scalpers demand lower timeframes, such as the 5-minute and 15-minute periods, for example. Longer-term swing traders and investors (often referred to as position traders), nevertheless, govern their decisions by means of higher timeframes—think the daily, weekly and monthly charts.
MT4 comes with 9 timeframes. The majority of MetaTrader users are able to function with 9 timeframes; others prefer the flexibility MT5 offers: 21 timeframes. This benefits those who require more extensive analysis.
- Trading Orders.
How traders—as well as investors—and Forex brokers communicate is important, a practice achieved through the use of trading orders.
Breakout scenarios often initiate rapid movement; missing such moves can mean the difference between winning and losing trading strategies. Consequently, employing what’s known as buy and sell-stop orders allows the trader to place an order to buy (and sell) above (and below) current market price. Think of the buy-stop order as a pending instruction to enter long at the next available offer (ask price) once filled.
In terms of order types, MT4 and MT5 provide 2 market orders, 2 stop orders and a trailing stop feature. The difference is the pending orders. MT4 offers 4 pending order types (buy stop, buy limit, sell limit and sell stop); MT5 provides 6 pending order types (additional orders are buy and sell-stop limits).
- Markets (financial instruments)
MT5 facilitates access to a number of trading instruments, including Forex, futures, options, stocks, and bonds through CFDs. Some brokers also enable traders to invest in physical shares.
However, like the maioria of brokers, FP Markets offers only CFD products.
MT4 was designed primarily for Forex traders.
We recommend MT4 for Forex but a range of products can be traded on MT5 and Iress platforms. It’s also worth noting cryptocurrencies (cryptos) can be traded through either MT4 or MT5 with FP Markets.
- Technical Tools and Indicators (charting studies)
Performing comprehensive technical analysis involves the use of dedicated tools. Though MT4 and MT5 almost spoil users through an array of technical indicators and graphical objects (sometimes referred to as either analytical objects or drawing tools), the majority of successful traders and investors employ only a handful of tools to navigate markets.
Overwhelming charts with technical indicators often leads to a situation known as analysis paralysis. This means essentially freezing yourself, unable to know what to do next due to the situation being over analysed and, therefore, providing multiple alternatives.
MT4 brings 23 graphical objects to the table while MT5 supplies 44 options, which includes tools such as Fibonacci and Gann.
30 built-in technical indicators are available on MT4, whereas MT5 delivers 38 choices.
Nevertheless, it’s important to understand MT4 and MT5 users have access to the MetaTrader Market, a service accessible through the Market tab in the MetaTrader platforms. According to MetaTrader, it’s a place traders and investors can purchase or rent Expert Advisors and technical indicators, with the choice of nearly 2,000 trading robots and 2,000 technical indicators.
- MQL4 and MQL5—Algorithmic Trading
The use of automated trading systems continues to gain in popularity.
Programming languages are available on both MT4 and MT5: MetaQuotes Language 4 (MQL4) and MetaQuotes Language 5 (MQL5).
Having an understanding of MetaQuotes language provides a skillset that enables MetaTrader users to produce scripts, custom indicators, Expert Advisors (EA), as well as trading robots (despite the terms often being used interchangeably, a key difference between an EA and a trading robot is an EA monitors the financial markets according to pre-defined parameters and highlights trading opportunities, but a trading robot takes things a step further and executes trades automatically based on set parameters).
The question as to which programming language offers the more superior experience remains debated. Some believe MQL4 is the easier language to understand and implement, though others claim MQL5 is more powerful and provides additional opportunities.
Another key point to take into account is MQL4 code cannot be transferred into MQL5 code.
- Depth of Market (DOM)
MT5 offers advanced market depth (DOM – depth of market), permitting users access to live bids and offers. MT4 also provides DOM, yet in basic form.
It is vital to acknowledge for MT4, the DOM is derived from broker-fed prices, while MT5 can connect to a real exchange and/or broker.
Ultimately, the choice between MT4 or MT5 is subject to a trader’s needs and trading system compatibility.
MT4’s trading platform provides everything required to function as a Forex or CFD trader. MT5, on the other hand, presents a multi-asset trading platform, with access to different financial markets and therefore the option to diversify.
Many newer traders start trading with MT4, thanks to its straightforward functionality, with focus predominantly on major currency pairs in the Forex market—think EUR/USD, GBP/USD and AUD/USD, for example. Experienced hands may favour the enhanced features of MT5, and appreciate access to multiple markets.
To help make a decision, consider taking advantage of our MT4 and MT5 demo trading accounts, offering real-time market prices. For those who prefer to trade on the go, we also provide a dedicated mobile trading app, available on iPhone or Android.