MT4 vs MT5: What is The Difference?

Without a question, the most popular trading platforms accessible globally are the MT4 and MT5. MetaTrader 4 was first designed for FX traders, but it changed over time, and MetaTrader 5 was created to encompass stocks, futures, cryptocurrencies, and commodities. It’s important to understand the differences between these two choices, as selecting the right trading platform for their needs may help traders improve trading performance and increase their overall profits.

Purpose and Market Access

MT4 was created especially for trade in fiat currencies. It provides a complete range of instruments catered for effective forex transaction execution and research of the currency markets. MT4 provides real-time price quotations, thorough charting with several time frames, and a range of order types to suit various trading styles. It supports many pairs of currencies. Its easy-to-use interface allows both novice forex market players and seasoned traders looking for dependable and simple capabilities.

That was further enhanced in MetaTrader 5. This platform gives access to multiple asset types for trading. Its users are able to diversify their portfolios across a variety of asset classes, because they have access to numerous financial markets from a single platform. MT5 provides insights into market liquidity and order movement by connecting to both centralized exchanges and OTC markets. Tools such as the Depth of Market tool are available. This is particularly beneficial for stock and futures trading, where an understanding of market depth is essential.

• MT4: Focused on forex trading; ideal for currency traders.
• MT5: Multi-asset platform; suitable for trading forex, stocks, commodities, and futures.

Technical and Fundamental Analysis Tools

Along with charting tools, MT4 provides traders with a whole range of technical indicators designed particularly for forex trading. Its 30 built-in technical indicators and 31 graphical features provide complete technical analysis of currency pairs. 

MT4 lets traders look at market patterns over many periods by supporting nine time frames ranging from one minute to one month. For individuals with basic programming knowledge, the platform also allows customizing of indicators and the creation of automated trading strategies using the somewhat easily available MQL4 programming language.

Offering 38 technical indicators and 44 graphical items, MT5 expands on these analytical capabilities by giving a wider spectrum of instruments for in-depth market research. It covers 21 time frames, thereby allowing traders more freedom to examine data from one-minute charts to monthly intervals. 

MT5 supports the display of up to 100 charts simultaneously, thus enabling thorough market and instrument monitoring. By keeping traders informed about economic events and news releases that can affect different financial markets, MT5 additionally brings a thorough economic calendar and financial news services straight into the platform, therefore supporting fundamental analysis.

• MT4: 30 technical indicators; 9 timeframes; basic fundamental analysis tools.
• MT5: 38 technical indicators; 21 timeframes; advanced fundamental analysis with economic calendar.

Programming Language and Automated Trading

Using Expert Advisors (EAs), which are systems designed to automatically execute trading activities using predefined algorithms, both MT4 and MT5 provide automated trading. They employ different programming languages, however, which affects the complexity and capacity of the algorithms that may be developed.

MT4 runs the MQL4 programming language. MQL4 is procedural and somewhat simple, which makes it available to traders who are still new in programming. It lets users design personalized EAs and indicators to automatically implement various trading plans and strategies. MQL4’s simplicity and strong community support make a lot of materials, tutorials, and pre-built EAs easily accessible.

You may also like

White Label

Demetris Makrides

May 6, 2024

13 min

What is an MT4 White Label, and How Much Does it Cost?

By contrast, MT5 makes use of the MQL5 programming language. More advanced and supporting object-oriented programming, MQL5 helps to create more sophisticated trading robots and indicators. MQL5’s enhanced capabilities let one design complex algorithms and have more control over various trading methods. 

Furthermore, included in MT5 is a multi-threaded strategy tester that enables quicker and more effective backtesting and simultaneous EA optimization across many currency pairings and time periods. This sophisticated testing environment enables traders to more precisely verify and hone their automated trading approaches.

• MT4: Uses MQL4; simpler programming; extensive community support for EAs.
• MT5: Uses MQL5; more advanced programming; improved strategy testing capabilities.

Order Types and Execution Modes

Buy Limit, Sell Limit, Buy Stop, and Sell Stop are four fundamental forms of pending orders that MT4 offers traders. These orders provide traders flexibility depending on expected market moves by letting them carry out future deals at set price levels. A Buy Limit order, for instance, lets a trader purchase an item at a price less than the current market price, hoping the price would drop to a certain level before increasing. On the other hand, a Sell Limit order lets you sell for more than the going market price, expecting that price would rise before falling. 

MT4 offers three execution modes: Instant Execution, which executes trades at the displayed price; Request Execution, which allows traders to request a quote before placing an order; and Market Execution, which executes orders at the current market price without requotes, prioritizing execution speed over exact pricing.

By adding two more pending order types—Buy Stop Limit and Sell Stop Limit—MT5 extends on these characteristics. Combining parts of stop orders and limit orders, these hybrid orders let traders establish more exact entry locations and use advanced trading techniques. Once the designated stop price is achieved, a Buy Stop Limit order, for example, becomes a Buy Limit order so that traders may profit on projected market moves under more control. 

You may also like

Technology

Demetris Makrides

August 9, 2024

11 min

What is Stop Loss (SL) and Take Profit (TP) and how to Use It?

Crucially for trading on centralized exchanges like stocks, commodities, and futures, MT5 now introduces an additional execution option known as Exchange Execution. This method guarantees that orders are carried out following the rules of the exchange, therefore giving traders direct access to market depth and liquidity information.

MT5 improves trading flexibility and accuracy by providing a wider spectrum of pending order types and execution techniques. More sophisticated techniques catered to different market circumstances and asset classes allow traders to use. Particularly in fast-moving or turbulent markets, the extra choices in MT5 help to improve risk management and enable more effective trade execution, therefore facilitating their benefits.

MT5 improves trading flexibility and accuracy by providing a more diverse set of pending order types and execution mechanisms. Traders may use more advanced methods that are suited to certain market circumstances and asset types. The additional options in MT5 facilitate better risk management and allow for more efficient execution of trades, which is particularly beneficial in fast-moving or volatile markets.

• MT4: 4 pending order types; 3 execution modes.
• MT5: 6 pending order types; 4 execution modes including Exchange Execution.

Hedging and Netting Systems

Hedging—a technique wherein traders open many positions on the same financial asset in different directions concurrently—is made possible by MT4. On the same currency pair, a trader may therefore simultaneously maintain a purchase (long) position as well as a sell (short). Forex traders often use hedging as a standard risk-reducing technique as it lets them minimize possible losses from negative market swings without closing their initial positions. Hedging helps traders to keep flexibility in their trading tactics, profit from short-term market swings, and protect their assets against volatility.

Originally intended with a netting system, MT5 is better suited for exchange-traded markets like equities, commodities, and futures. Traders under the netting system only have one open position per financial item. Should a fresh transaction be made on the same instrument, it will either close or change the current position instead of generating a separate one. This method is widespread practice in markets where hedging is not widely utilized or allowed and conforms with rules of many centralized exchanges.

You may also like

Technology

Demetris Makrides

July 26, 2024

10 min

What is Hedging? Best Practices in 2024

But given the trading community’s great demand, MT5 now also enables hedging. This advancement lets traders decide which of the hedging and netting methods best fit their particular need and the markets they trade in. Through enabling hedging, MT5 gives forex traders and others who rely on this approach the opportunity to better control risk. Traders can open unlimited multiple positions in the same instrument, in the same or opposite directions, without restrictions.

• MT4: Hedging allowed.
• MT5: Supports both hedging and netting systems.

User Interface and Experience

Renowned for its simplicity and ease of use, MT4 has a clear interface appealing to traders with different degrees of knowledge. The design of the platform emphasizes accessibility and utility, therefore giving users a neat layout in which tools and important elements are simple to find. Customizable toolbars and charts on MT4’s UI let traders adapt their workspace to their tastes without adding an unnecessarily difficult element. This simplicity makes MT4 especially appealing to new traders, since it shortens the learning curve and allows them to execute transactions with confidence.  

Furthermore, MT4 uses fewer system resources, which guarantees seamless operation even on less powerful or outdated systems. Many traders use MT4 as its efficiency reduces technological problems that could affect trading operations.

Offering further features and improved customizing choices, MT5 presents a more contemporary and sophisticated user experience. The platform is intended to give an enhanced user experience, catering to traders that need more complicated functions and more control over their trading environment. Extended charting features of MT5’s interface allow one to access a larger spectrum of periods and analytical tools and show many charts concurrently. 

The program also provides sophisticated order management and market depth information, therefore giving traders complete data at their fingertips. Although MT5’s enhanced interface provides more analytical depth and flexibility, it might need more computational resources, which would influence performance on less competent or older systems. Should their hardware fall short of the increased system requirements of the platform, traders might have longer loading times or less responsiveness.

• MT4: Simple, user-friendly interface; lower resource usage.
• MT5: Advanced interface with more features; higher resource requirements.

Compatibility and Support

For many years, MT4 has been the industry standard for trading systems; brokers all across the world strongly support it.  Its reliability and longevity have produced a sizable user community that has in turn contributed to build a massive ecosystem of independent plugins, custom indicators, and EAs. 

This extensive resource base lets traders greatly improve and personalize their trading environment. MT4 is familiar, hence instructional resources, tutorials, and community assistance are easily accessible for traders of all levels. Brokers value its strong track record and smooth integration skills, which help to ensure its continuing supremacy in the forex trading sector.

While MT5 is growing in popularity, it has not yet reached the same global degree of support as MT4. Because of the required major infrastructure changes and the well established user base of MT4, several brokers have been reluctant to accept MT5. But demand for enhanced features and multi-asset trading capabilities provided by MT5 is driving rising acceptance. Brokers are extending their products to incorporate MT5 as traders looking for access to a wider spectrum of financial instruments and improved analytical tools force them to do so. 

Third-party tool availability, plugins, and EAs are expanding as more users migrate to MT5. Though not as expansive as MT4’s ecosystem, MT5’s support system is fast growing and provides traders with more tools to improve their trading strategies.

• MT4: Widely supported; extensive third-party tools.
• MT5: Growing adoption; expanding broker support.

Conclusion

Choosing the platform most in line with your trading objectives depends on knowing the differences between MT4 and MT5. Forex traders still find MT4 to be a strong and dependable option; for those who want multi-asset trading, MT5 provides more options. Examining the particular tools and characteristics of any platform can help you to make a wise choice and improve your trading success.