The Metatrader 4 trading platform is very well known and can definitely be said to set the industry standard. I have never seen a Forex broker that does not either offer trading directly through the platform or through an in-house bridge to the platform, although this can be at the cost of a slightly higher spreads and/or commissions.The Metatrader 5 trading platform is somewhat less commonly offered, although it is produced by the same company (the Cyprus-based MetaQuotes Software Corporation).
To understand why this is the case, we need to take a closer look at the platform.
Top Forex Brokers
MT4 or MT5 Which Trading Platform is Better for You?
The answer to this question should seem pretty clear by now after reading the below MT4 and MT5 comparison. If you have to comply with U.S. regulations for whatever reason, want to do a great deal of back testing using the platform offline, or want access to stock and commodities exchanges that are hard to reach through Metatrader 4, then Metatrader 5 is the obvious choice for you.
It has to be said that otherwise, there is no reason not to use Metatrader 4, which remains a tried and tested gold standard platform of the industry. It is far more popular than Metatrader 5, and for good reason: it is easy to use and manage and has generally less glitches than its browser-based competitor platforms.
What is MT4?
MT4 is the leading algorithmic Forex trading platform. It also has an embedded copy trading service. MT4 stood the test of time, as it presents the most versatile trading infrastructure, upgradable via 25,000+ custom indicators, templates, and EAs. It also supports traditional account management via MAM/PAMM accounts and forms the cornerstone of thousands of financial firms with trillions in monthly trading volumes.
MT4 Pros & Cons
Below are the pros and cons of the MT4 trading platform, which traders should consider before making an MT4 vs. MT5 decision.
The MT4 pros are:
- Algorithmic trading
- API trading
- 24/7 market access via VPS hosting
- Most versatile trading platform
- Copy trading
- Mobile trading
- MAM/PAMM accounts
- Widespread availability
The MT4 cons are:
- Outdated user-interface
- MetaQuotes stopped MT4 support.
MT4 vs MT5 Comparison Infographic
What is MT5?
Because Metatrader 5 was released in 2010, five years after the release of Metatrader 4 and at a time when Metatrader 4 was already very popular, and due also to the number sequence in the platform names, there is a common misapprehension that Metatrader 5 was a new improved version of Metatrader 4. This is not really true at all.
Metatrader 5 was designed to do some things that Metatrader 4 could not do.
Essentially, Metatrader 5 was designed to be able to trade markets other than Forex, such as stocks and commodities, because it is better able to plug into a centralized trading exchange. Forex is a completely decentralized market. At the time of the MT5 development and release, it can be assumed that Metaquotes foresaw a retail stocks and commodities trading boom, and designed the software to fit that market.
The other major differential design factor was its compliance with the U.S.A.’s “no hedging rule”, which states that clients of Forex brokers in the U.S.A. must deal on a F.I.F.O. (first in, first out) basis. Only Metatrader 4 can deal with hedging: Metatrader 5 cannot. This is fine for traders in the U.S.A. as they are legally barred from hedging in any case, but in most of the rest of the world, many traders find an inability to execute hedging operations a very annoying an unnecessary handicap.
MT5 Pros & Cons
There are many MT4 vs. MT5 similarities, and below are the MT5 advantages and disadvantages over MT4.
The MT5 pros are:
- More timeframes
- More technical indicators
- More graphical objects
- Improved back-testing capabilities.
- Integrated economic calendar
- More order types
- Partial order fill policy
- E-mails with attachments
The MT5 cons are:
- Fewer upgrades
- Limited availability
What is the Difference Between MT4 and MT5 Metatrader?
The two major differences have already been covered, but there are a number of others worth mentioning within any MT4 and MT5 comparison.
Metatrader 5 uses a programming language called MQL5 as opposed to the MQL4 used by Metatrader 4. The exciting thing about MQL5 is that it allows “black box” programming which, in a nutshell, means that it is easier to program and so will logically be a better framework for users and developers of trading robots and other expert advisors. However, MetaQuotes expanded this capability into MQL4 in 2014, so it is not a difference between the platforms any more, although there is a likelihood that if the language is upgraded at some time in the future, MetaQuotes will not extend any upgrades into MQL4 as well as MQL5.
It should be noted that there is no backwards compatibility. Programs written for Metatrader 4 cannot run on Metatrader 5. This can be a serious drawback for traders who were wishing to “upgrade”, and is a key reason why such a change shouldn’t be seen as an upgrade.
It is true that Metatrader 5 retains two key programming-related advantages over Metatrader 4. Firstly, its back testing functions where you can test programmed trading strategies execute at a much faster speed, which is a feature that can save you a lot of time if you are the kind of trader who needs to run a large number of back tests. It also allows simultaneous multi-currency pair back testing. Together this can speed up back testing procedures immeasurably.
There are some additional minor differences between the two trading platforms that it is worth being aware of:
MT4 | MT5 | |
|---|---|---|
Markets | Forex, CFDs | Forex, Futures, Stocks, Bonds, Options |
Technical Indictors | Fewer | More |
Graphical Objects | Fewer | More |
Pending Order Types | Fewer | More |
Order Fill Policy | Fill or Reject | Fill or Reject, Immediate or Cancel, Return |
Partial Order Fill Policy | No | Yes |
Email System | No Attachments | Allows Attachments |
Fund Transfer Between Accounts | No | Yes |
Netting | No | Yes |
Exchange Trading | No | Yes |
Can You Use Both MT4 & MT5?
Before making an MT4 vs. MT5 decision, traders should know they can use both trading platforms from the same device. Many well-established Forex brokers offer MT4 and MT5, while newer entrants into the competitive brokerage scene rely solely on MT5. It is an excellent combination for traders using multiple accounts with different strategies, as they can have both trading platforms open. Traders cannot open more than one MT4 or MT5 platform from the same broker on the same device.
Forex brokers offering MT4 and MT5 allow frictionless account management via their back office, including intra-account transfers between MT4, MT5, and all sub-accounts.
Will MT4 be Phased Out?
MetaQuotes Software tried to phase out MT4 since it launched MT5 in 2009 but underestimated the support from brokers, traders, and developers for MT4. While it officially stopped MT4 support, phasing out MT4 could take another decade or more. The only way to ensure MT5 becomes the only MetaQuotes Software product available is for the company to force clients to MT5, stop all MT4 servers, and eliminate licenses on their back end, which will most likely result in a tremendous drop in business revenues. Brokers with full licenses could still find a solution to keep MT4 alive.
Despite 15 years on the market, MT5 trails MT4 across the board. Initially, MT4 custom indicators, templates, and EAs lacked backward comparability to MT5, as the former relied on MQSL4 versus MQSL5 for the latter. From build 600, MQL4 and MQL5 use the unified MetaEditor, a sign that MetaQuotes Software understands the significance of MT4 and a potential hint that MT4 will not face a forced phase-out. Eventually, a natural replacement could occur, as the unified MetaEditor allows everyone to migrate from MT4 to MT5 without losing their investment.
Which is a Better Platform for Beginner Traders, MT4 or MT5?
With backward comparability essentially an option, beginners should consider MT5 unless they want to use some of the 25,000+ MT4 custom indicators, templates, and EAs MT4 unavailable on MT5. Both trading platforms ensure traders have the necessary tools.
A Trader's Perspective
Most seasoned traders will tell you that all they really want from a trading platform is something that is reliable and easy to use, intuitive, and doesn’t crash. They will also tell you that although Metatrader 4 might have a few annoying features, it works well enough, and allows them to stay on top of their trades and charts at the same time. As the choice of broker is really more important than choice of platform, all the platform-centered advertising and Metatrader reviews are mostly just gimmicks that are best overlooked since practically every broker offers access to Metatrader 4.
