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MT4 Vs. MT5 – Which One Should You Use?
The Real Story Behind Forex Trading Platforms
Forex traders have a choice of which trading platform to use. However, this choice is interlinked with the choice of Forex broker, as not every type of trading platform is offered by every broker. Moreover, some brokers do not have true compatibility with certain Forex trading platforms, but offer access to them through a bridge, which is a piece of software that connects a Forex broker’s dealing system with the platform. This can work satisfactorily, but if the bridge malfunctions or is slow it can adversely affect trade execution and management.
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. See our top MT4 Forex Brokers List & Reviews.
MT4 vs. MT5 Infographic
What is MT5?
Because Metatrader 5 was released in 2020, 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, designed to do the same job better. This is not really true at all, although it is a trading platform and back testing machine just as Metatrader 4 is, and the graphical user interfaces look and feel fairly similar. Any adequate Metatrader review should point this out.
Metatrader 5 was actually designed to do some things that Metatrader 4 could not do. In reality, it was aimed at a different market, and thus, there is really very little reason to enter a discussion about “MT4 vs. MT5”.
Essentially, Metatrader 5 was designed to be able to trade markets other than Forex, such as stocks and commodities, essentially because it is better able to plug into a centralized trading exchange. Forex is a completely decentralized market, with a number of major players providing liquidity into this huge market at slightly different prices, in an uncoordinated fashion. Stocks and commodities, the latter of which is traded largely as a futures contract (infact several contracts with different expiry dates), must usually be traded through a centralized process before ownership can change hands with full legal effect. 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. This means that if for example a trader goes long 1 lot of EUR/USD, and then goes long an additional 1 lot of EUR/USD, the first trade must be closed before the second trade can be closed. While Metatrader 4 logs every trade individually and allows for management of each individual position separately, Metatrader 5 automatically aggregates all positions. Therefore, only Metatrader 4 can deal with hedging: Metatrader 5 caxnnot. 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. It is probably the major reason why many traders have come to feel annoyed at being “pushed” into using Metatrader 5 in the place of Metatrder 4 by their brokers and arguably by MetaQuotes as well.
So in a nutshell, Metatrader 5 was developed to attract non-Forex markets and U.S. markets and to meet the inherent needs of those markets better than Metatrader 4 could. That is the true story of MT4 vs. MT5.
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What is the Difference Between MT4 and MT5 Forex Trading Platforms?
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 2020, 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.
Which Trading Platform is Better for You?
The answer to this question should seem pretty clear by now after reading the above 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.
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.
MT4 vs. MT5 FAQs
Can I use mt4 account in mt5?
No, but many brokers offering the MetaTrader 4 trading platform also offer the MetaTrader 5 trading platform and will allow you to switch.
Is MetaTrader only for Forex?
MetaTrader 4 is designed to trade Forex while MetaTrader 5 is designed to trade a wider range of assets in addition to Forex, such as stocks, commodities, futures, and indices. However, some brokers offer trading of non-Forex instruments through MetaTrader 4.
Is mt4 a good platform?
MetaTrader 4 is still the most popular Forex trading platform in the world after more than a decade and is offered by almost every Forex broker in the world, which speaks for itself.
Do I need a broker to use MetaTrader 4?
You can download a demo of the platform which includes a live price feed directly from MetaTrader without having to deposit any money with a broker. Almost every Forex broker also offers a free demo account with MetaTrader 4 for a period of at least 1 month and often longer.
Adam Lemon began his role at DailyForex in 2020 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.
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MetaTrader 4 vs 5 – Which One? (2020 Review)
Choosing the right Forex trading platform is one of the key elements that most traders are curious about. In the list of the top platforms, MetaTrader 4 (MT4) remains as the most popular, however, since the appearance of MetaTrader 5 (MT5) in 2020, the debate of whether using one version or another has grown significantly.
The main difference between the two versions is that MT4 focuses on Forex trading and CFDs, while MT5 also includes other assets like stocks and futures. Secondly, MT4 has hedging, and MT5 has hedging and netting. In regards to algorithmic trading, MT5 has a multi-currency strategy tester and it is faster at testing and optimization in comparison to MT4.
In this article, we will review the differences between the two platforms, so you can make a decision on which one should you use and answer the main question everybody is interested in:
Do I stick with MetaTrader 4 or should I switch to MetaTrader 5?
First, in Part A, we will talk about the core differences between MT4 and MT5. Then in Part B, we will give you something you won’t find anywhere else. A detailed year-by-year analysis of how MT4 and MT5 have been developing over the past decade. Finally, in the third section, we will draw a conclusion.
Table of Contents
Part A – MetaTrader 4 vs 5: Core Differences
Often when you read about MT4 vs MT5 you see a table and a side-by-side comparison of the two. However, in this article we will focus on what is crucial for you as a trader, especially if you are getting started.
There are only three core differences between the two platforms. These are:
- Number of Markets
- Tools for Market Analysis
- MQL4 vs MQL5
Let’s go over them one-by-one:
Number of Markets
MetaQuotes had already dominated the Forex market with their revolutionary MT4 platform. The main reason why MetaQuotes developed MT5 is to enable access to markets that are not available in MT4. Here’s a sample list of exchanges which you can access via MetaTrader 5 already today:
MetaTrader 4 is great for the decentralized, open, and highly unregulated on a global scale FX market. However, it doesn’t check all the boxes as a platform for other markets.
It’s just not designed that way: to connect directly to exchanges, like those listed above, the platform has to integrate with gateways for those exchanges – that’s how it will get quotes and market news, and perform trade operations. Plus, there are heaps of other nuances.
While markets like Warsaw Stock Exchange and ASX (Australian Stock Exchange) are good wins, they are not the main goal for MetaQuotes. The big prize are the US Equity Markets or Stock Markets with there trillions of dollars market cap:
Access to more markets can be beneficial for experienced traders that want to trade to shares from companies like Tesla or Amazon. However, for the average Forex trader, this makes not much of a difference.
Tools for Market Analysis
While MetaTrader 4 only offers 9 timeframes, MetaTrader 5 offers 21 timeframes; this can give traders an edge for more analysis of the market. However, if you like to code in MQL4, in MetaTrader 4 you can rebuild virtually any timeframe in MT4 using the period converter script.
|Types of Charts (Timeframes)||MetaTrader 4||MetaTrader 5|
According to MetaQuotes, MetaTrader 4 offers 30 built-in indicators and 24 analytical objects. Also, there are over 2000 free custom indicators and 700 available for purchase. In contrast, MetaTrader 5 has 38 technical indicators, 44 analytical objects and offers an unlimited number of charts (MT4 has a limit of 128).
One of the most convenient features of MT5 is that it offers an Economic Calendar with critical events that can impact the market. As MT4 doesn’t have an Economic Calendar, some traders have used the Forex Factory calendar as a turnaround to track events or perform fundamental analysis.
MQL4 vs MQL5
The third core difference is related to algorithmic trading. MetaTrader 4 uses a programming language called MQL4, while MetaTrader 5 uses MQL5.
MQL4 might be more suitable for beginners due to its simplicity when creating scripts, indicators and EAs. In contrast, MQL5 is an object-oriented program (OOP) based on C++, which is more complex but gives professional Algorithmic traders more room for advanced commands and calculations.
What is OOP?
The whole hype around MQL5 is that it brings OOP into algorithmic trading. That is why a lot of traders/programmers were so excited about MT5 in the first place.
In simple terms, OOP allows you to break down your program into blocks. Each of these blocks is like a black box: something goes in and some result / or action comes out:
In the world of programming, this is very powerful for multiple reasons. For instance, once you’ve coded one of these black boxes for one of your Expert Advisors you can then clone it and use it in the next system you develop too.
Also, OOP is great for collaboration. You can assign one developer to work on one set of black boxes, and another developer – on another. Then you can bring them together into one final program without even knowing what’s inside each of these blocks.
No Backward Compatibility
As you are probably aware, you cannot simply transfer your MQL4 code into MQL5. MetaTrader 4 initially took Forex Trading by storm mostly thanks to its ability to run Algorithmic Trading systems or EAs. A high percentage of traders use EAs or custom indicators/scripts in their trading. Moving these from MQL4 to MQL5 would be a very costly and time-consuming exercise for most.
On the other hand, MetaTrader 5 has two main advantages on this front versus MetaTrader 4:
- The Multi-currency strategy tester; and
- MT5 is superior for testing and optimization. Hundreds of times faster.
While the first would probably be of interest to about 10–15% of traders, the second is a great improvement. Faster optimizations mean less time spent configuring your EAs.
Part B – Historical Evidence, Demand and Usage Trends
In this section, we will take a look at demand trends from both versions.
MT4 vs MT5
Using Google Trends, we can visualize how frequently the terms MetaTrader 4 and MetaTrader 5 have been searched for over the past 10+ years:
We can see that hype started building up around MT5 (red) after its imminent arrival was announced in early 2009. However, the trend flattened out right after MetaQuotes released the beta version in October 2009. Nevertheless, since the end of 2020 the trend for MT5 has been picking up.
The main reason for this is that since the end of 2020, MetaQuotes started investing heavily again on releasing new features for MT5. Also, on April 24th, 2020, MetaQuotes announced released a hedging option in MetaTrader 5 to encourage more brokers and traders to switch to MT5.
On the other hand, searches for MetaTrader 4, had been growing since inception up to early 2020. Then a bit off an extended period in 2020–2020, and again steady growth picked up in 2020 and has been continuing since.
MQL4 vs MQL5
Between 2009 and 2020, MQL4 was searched for about twice as frequently as MQL5; however, MQL4 search growth flattened out at the start of 2009. At the same time, interest in MQL5 grew steadily between 2009–2020 and hit it off in mid–2020, surpassing MQL4 at the end of 2020.
Over the past years, MetaQuotes have been actively developing the MQL5.community (which is for both MQL4 and MQL5 programmers). This could be one of the reasons for the rapid increase in “MQL5” searches.
Also, the MetaTrader 5 build 1860 release in mid-2020, enabled some key features for algorithmic traders like functions for operations with time series that make smoother the transition of EAs and applications from MQL4 to MQL5.
History of Builds
If we go to the news releases page for MT4 and MT5, by doing some simple web-scraping, we can retrieve all of the dates of the releases/updates/patches that ever occurred for MT4 and MT5 since 2008 until the start of 2020.
Putting all of these updates together creates the chart below, which illustrates the number of updates that happened in each month (the vertical axis on the left ranges from 1–5 updates in any given month).
Note that this chart doesn’t take into account the significance of the updates; it is a simple count of updates.
Here you see 4 distinct areas.
- A: Prior to the release of MetaTrader 5
- B: The 2 years following MT5 Beta release
- C: From 2020 to 2020
- D: From 2020 to Present
Before the release of MT5 (Area A), there was about one update to MT4 per month on average.
Area B – As soon as MT5 Beta hit in November 2009, the market updates to MT4 stopped. There were three error fixes along the way there, but those weren’t significant.
This suggests that MetaQuotes were focused on MT5 and they decreased development resources for MT4. They were waiting out for MT5 to takeover to then completely deprecate MetaTrader 4 just like they did with MetaTrader 3 back in 2005.
However, that didn’t happen. There was some resistance from traders to move or try MT5 mainly because MT5 didn’t include hedging at that time. Therefore, in early 2020 MetaQuotes was forced to perform updates and releases regarding MT4.
Then we have Area C, where the number of builds was very similar in both versions of the platform, MT4 finally started catching up to MetaTrader 5. In February 2020 MT4 for iPhone came out (1 year after MT5 for iPhone), and two months later, in April 2020 MT4 for Android arrived (only 6 months later than MT5 for Android).
Then the Build 600 was in February 2020, which introduced the new MQL4 programming language, added the MetaTrader 4 markets tab, and introduced the User Account Control (UAC) system, which is not very popular, but necessary for an application to have if it’s going to be compatible with Windows 8 and onward.
When everything seemed to indicate that MetaQuotes was going to be pulling back MT5, the trend started to change again. In April 2020, build 1325 was released, adding the hedging option to MT5, which until recently was only supported in MT4. Area D in the graph above shows how since build 1325, MetaQuotes looks to be heavily reinvested on MT5, this was summarized by Renat Fatkhullin, their CEO, as follows:
Why use two platforms, when you can access all the required functionality in one of them?
The MetaQuotes Ambiguity
The dependency of the Forex retail market on MetaTrader 4, has served as a catalyzer of the poor management decisions that MetaQuotes has made during the last decade.
It is still unclear if MetaTrader 5 will replace MetaTrader 4. However, releases like the build 1325 or MetaQuotes decision to stop issuing new licenses to new brokerages, indicate that the migration from MT4 to MT5 will take place sooner than later. There is still an enigma on how they will solve the backward compatibility issue between MQL4 and MQL5.
To sum up, the main differences between MetaTrader 4 and 5 are:
- MetaTrader 5 was developed with US Equity & other markets in mind.
- MT5 5 includes more tools for market analysis.
- It has MQL5, an object-oriented program based on C++ to code advanced EAs.
However, MetaTrader 4 remains the most popular and preferred Forex trading platform for beginners due to its simplicity and ease of use. MQL4 is more friendly to get started with Algorithmic trading and EAs.
The conclusion for experienced programmers is a bit different. If you think you will need the multi-currency strategy tester as well as the very fast testing and optimization, then maybe give MT5 a shot. However, it will only be worth it if you can commit to building your systems from scratch.
At the same time, MT4 should already have most of the things an experienced coder will ever need, including OOP. If that’s not enough, then instead of MT5, you can have a look into using DLL or even other platforms with good API like jForex from DukasCopy.
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