Key Takeaways
- MT4 stands out for its user-friendliness, especially for those new to Forex trading, focusing primarily on Forex assets and CFDs. It’s simpler but comes with fewer features compared to MT5.
- MT5 boasts a richer set of technical indicators, more timeframes, and enhanced graphical tools, adding an economic calendar to its list of upgrades. This platform caters to broader markets like stocks, futures, and options.
- However, MT5’s advanced capabilities come with a complexity that might be challenging for beginners.
MetaTrader 4 (MT4) and MetaTrader 5 (MT5) are sophisticated trading platforms developed by MetaQuotes Software, with MT4 being the more widely adopted choice among forex traders. It is the leading online trading platform, celebrated for its accessibility and ease of use. Let’s explore the reasons behind MT4’s popularity and the distinct features that set it apart from MT5.
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What is Metatrader 4?
MetaTrader 4, often shortened to MT4, is a trading platform created by MetaQuotes in 2005. It’s widely known for its association with forex trading, but its capabilities extend to trading in various markets, such as indices and commodities through Contracts for Difference (CFDs).
There are a couple of reasons why MT4 has gained popularity among traders. Firstly, MT4 trading offers a high level of customization, allowing traders to tailor the platform to fit their specific trading styles perfectly. Secondly, MT4 enables traders to execute trades automatically based on predefined criteria.
What Is MetaTrader 5
MetaTrader 5 was launched in 2010 and stands out as a versatile trading platform, enabling users to engage with various financial markets such as forex, stocks, indices, commodities, and cryptocurrencies. Unlike its predecessor, MT5 showcases remarkable improvements in speed and efficiency and offers broader trading capabilities. Although it does not replace MT4, MT5 gives traders access to more advanced tools for achieving trading success. These include sophisticated technical and fundamental analysis features, trading signals, and trading robots.
How MT4 Compares to MT5
| Feature | MT4 | MT5 |
| Markets | Forex, CFDs | Forex, Futures, Stocks, Bonds, Options |
| Technical Indicators | 30 | 38 |
| Graphical Objects | 31 | 44 |
| Pending Orders | 4 order types | 6 order types |
| Order Execution | Fill or Kill | Fill or Kill, Immediate or Cancel, Return |
| Economic Calendar | Not included | Integrated calendar |
| Market Depth | Not available | Level 2 depth |
| Hedging | Supported | Supported |
| Exchange Trading | Not supported | Supported |
| Programming Language | MQL4 | MQL5 |
Technical Indicators
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Metatrader 4 comes equipped with 30 built-in indicators right out of the box. For those seeking more options, there are over 2000 custom indicators available for free download. For those willing to pay, there are over 700 indicators available for purchase in the Market.
Metatrader 5 also includes a solid set of 38 built-in technical indicators. Additional free custom indicators can be found in the Code Base. As with MT4, thousands of paid indicators are available for purchase in the MT5 Market.
Target Markets
The MetaQuotes team designed MT4 specifically for trading forex and CFDs. However, demand grew among traders for a top-notch platform that provided access to other financial markets beyond just forex. This led the MetaQuotes developers to create the MT5 platform to meet this need. Forex-focused traders will still favor using MT4 over MT5, given its specialized forex trading features, ease of use, and fewer technical issues that traders might encounter.
Performance
MT5 operates much quicker than MT4 since it was launched more recently. MT5 also has superior server facilities compared to MT4. Specifically, MT5 employs four specialized servers, while MT4 uses only a single server.
Charting Tools
MT4 gives you 31 charting tools like lines, channels, Gann and Fibonacci tools, shapes, and arrows. These help forecast potential price moves.
MT5 has even more drawing tools – 44 in total. These include shapes, channels, Gann and Fibonacci tools, Elliott Wave tools, and more. So, you get more charting flexibility with MT5.
Timeframes
The MT4 platform provides traders with nine timeframe options: 1 min, 5 min, 15 min, 30 min, 1 hour, 4 hour, daily, weekly, and monthly. Though limited compared to MT5, these timeframes sufficiently meet the needs of swing and long-term traders.
MT5 expands on MT4’s offerings with 21 total timeframes: 1 minute to 30 min, 1 hour to 12 hours, daily, weekly, and monthly. Having access to such an extensive range of timeframes enables a more profound analysis of assets for MT5 traders.
Strategy Testing
The MT5 platform allows traders to safely backtest strategies by applying them to historical price charts. This assists traders in identifying potential flaws and best execution times. MT5 provides superior backtesting capabilities over MT4 thanks to its multithreaded strategy tester versus MT4’s single-threaded version.
Trading Orders
MT4 has four pending order types: buy stop, buy limit, sell stop, and sell limit. MT5 has more flexibility with six pending order types. The two extra are the buy stop limit and the sell stop limit. So MT5 gives you more options for placing advanced pending orders.
Economic Calendar
Unlike MT4, MT5 comes equipped with an integrated Economic Calendar that provides up-to-date information on impactful macroeconomic events. This handy feature assists traders in tracking upcoming financial announcements that may influence asset valuation. For MT4 users, third-party calendars such as Fxstreet Economic Calender can serve as a valuable alternative for following relevant economic news.
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Why MT4 Is More Widely Used Than MT5
MT4’s widespread popularity over MT5 can largely be attributed to its simplicity and user-friendliness, particularly appealing to those focused solely on forex trading. MT4 presents a less complex environment with fewer charts, timeframes, and tradable assets, making it more accessible for everyday traders. Despite MT5 featuring a more refined user interface, its sophistication only sometimes translates to ease of use for some. Another reason MT4 is more popular is that it has been around for five years, giving it plenty of time to appeal to traders.
Choosing Between MT4 and MT5
Both the MT4 and MT5 platforms are popular among the trading community. In short, MT4 is the ideal choice for newcomers to trading, as its primary functionality provides everything needed to start trading. For experienced traders, MT5 may be preferable due to its more extensive set of features. It is possible to trade on both MT4 and MT5 if your selected broker supports both platforms; however, separate accounts will be required for each platform, as you cannot access your MT5 account on MT4 or vice versa.