Difference between MT4 and MT5

Difference between MT4 and MT5
The difference between MT4 and MT5 lies at the heart of understanding the evolution of trading platforms. These two platforms, developed by MetaQuotes, serve as essential tools for forex traders by offering a range of features targeted toward various trading styles. 

MetaTrader 4, or MT4, has long been a favorite among forex traders due to its simplicity and efficiency. On the other hand, MT5 was developed with a more advanced platform to expand trading possibilities into a wider range of assets and features. 

Choosing between the two is not merely an issue of preference but essentially about aligning the capabilities of the platform with your trading needs. To better understand how these platforms differ, In this article we will dive into their key features and functionalities.

 

A Brief History of MT4 and MT5

 

MetaTrader 4 was released in 2005 and quickly became one of the leaders within the forex trading environment. Indeed, it was more straightforward and user-friendly; equally robust functionality made it almost the standard for traders at any level. Though prepared for forex trading first and foremost, its design let other asset classes find it very suitable.

 

MetaTrader 5 was released in 2010, with the aim of offering a more versatile and sophisticated trading environment. Although it maintained much of the ease of MT4, MT5 introduced new features to include support for other asset classes such as stocks and futures, more advanced tools, and charting capabilities.

 

 

Key Features And Functionalities of MT4 And MT5

 

Market Coverage

Probably the most striking difference between MT4 and MT5 is in their market coverage.

 

MT4: MT4 was primarily designed for forex trading and remains optimized for currency pairs. While it can support other asset classes through custom setups, its core functionality is focused on forex, limiting its appeal to traders who want to diversify into other markets.

 

MT5: The MT5 further extends the reach of trading possibilities by including support for a wider range of asset classes, including stocks, commodities, indices, and cryptocurrencies. This makes it a versatile platform for traders who want to diversify their portfolios. Given its multi asset capability, MT5 is especially in demand among those who trade on different markets of the world.

 

In short, if forex trading is your sole focus, MT4 suffices. However, for traders looking for a platform that can handle various asset types seamlessly, MT5 is the clear winner.

 

 

2. Programming Language

The programming language used by these platforms greatly influences the customization and automation capabilities.

 

MT4: uses MQL4, which is a simpler programming language that is well-supported in the trading community. MQL4 was tailored for forex trading, so it will be easier for traders to create EAs and custom indicators specific to their forex strategy.

 

MT5: MT5 utilizes MQL5, which is a bit more complex and high-level language. It allows for greater flexibility in programming, enabling traders to develop sophisticated trading robots and custom tools. MQL5 also simplifies backtesting and supports multi-threaded execution, making it ideal for advanced strategies.

 

Advanced users with a coding background and those reliant on automation and backtesting may find MQL5 indispensable. But for traders who are novices in programming, MQL4’s simplicity will be more friendly.

 

 

3. Order Types and Execution

The range of order types and execution methods can considerably affect a trader’s ability to implement their strategy.

 

MT4: MT4 supports four kinds of pending orders: Buy Stop, Sell Stop, Buy Limit, and Sell Limit. While these options will satisfy most trading styles, they do not provide the flexibility some advanced traders would like to see.

 

MT5: In MT5, the list is extended to six pending order types, including Buy Stop Limit and Sell Stop Limit. These extra order types give a broader possibility of strategy implementation, especially in turbulent markets where every cent counts.

 

This difference makes MT5 more appropriate for traders who need to feel more in control of their trade, while MT4 is enough to cover the standard needs of forex trading.

 

 

4. Time frames

The number of time frames directly influences the level of detail traders can analyze.

 

MT4: MT4 has nine standard time frames from one minute to one month. These are sufficient for most trading strategies, particularly those who focus on short-term trades or swing trading.

 

MT5: MT5 does a little better, offering 21 timeframes, including some unusual ones like two minute and eight-hour charts. This granularity permits traders to go deep with their analysis and make minute adjustments in strategy according to changes in the market.

 

This is a great feature for those who thrive on detail in market analysis and look for more flexibility in work.

 

 

5. Economic Calendar

Having an economic calendar can make it easier to keep track of the key events in the market.

 

MT4: MT4 does not have a built-in economic calendar. Therefore, traders have to use other means to be up-to-date with significant events. This may be somewhat inconvenient, especially when markets are moving fast.

 

MT5: The MT5 has a built-in real-time economic calendar, thus enabling traders to have an easy time monitoring economic indicators, news releases, and other events.

 

This feature alone makes MT5 a preferred choice for traders who value staying informed without the hassle of toggling between platforms.

 

 

6. Hedging and Netting Options

The ability to manage multiple positions efficiently is another area where MT4 and MT5 differ.

 

MT4: MT4 supports hedging, allowing traders to open multiple positions in the same currency pair in opposite directions. This feature is especially useful for traders employing hedging strategies.

 

MT5: MT5 supports both hedging and netting systems. The netting system, widely utilized in stock trading, combines positions for the same asset to give a better view of the general exposure.

 

This dual capability in MT5 makes it even more flexible, especially for traders who are operating in different markets.

 

 

7. Backtesting and Optimization

Backtesting plays an important role in the development and refinement of strategy.

 

MT4: MT4 has basic backtesting features, enabling traders to test strategies on a single currency pair. While effective, its limitations can hinder those looking to test complex or multi asset strategies.

 

MT5: MT5 significantly enhances backtesting by supporting multi-currency pair testing and offering detailed optimization features. More comprehensive tests can be run, and traders will be able to fine-tune their strategies for maximum performance.

 

For algorithmic traders and for those who heavily rely on expert advisors, MT5’s advanced backtesting capabilities are a godsend.

 

 

8. Interface and Usability

The user interface can make a difference in how efficiently traders can operate on the platform.

 

MT4: MT4 has been highly praised for its ease of use and simplicity; hence, it is good for beginners. Its uncluttered design allows traders to focus on placing trades without being distracted by a variety of complex tools.

 

MT5: MT5 has a more complex interface, filled with features and tools. While this makes it more potent, it can also feel daunting for those new to trading platforms.

 

To experienced traders, the advanced interface of MT5 offers functionality and control unparalleled by many. For beginners, MT4 remains easier to use.

 

Pros of MT4

 

1. Ease of deployment: MT4 has a pretty seamless setup process, making it easy onboarding for traders.

 

2. Lightweight platform: MT4 was designed in such a way that it works well and does not load your computer while working with it. This fact provides comfort to traders of all levels.

 

3. User-friendly interface: It has an intuitively understandable design, especially for beginners.

 

4. Cross-platform compatibility: MT4 is ready for operation on different OS, such as Linux, Mac, Windows, iOS, Android, providing flexibility for traders on various devices.

 

5. Automated trading: MT4 enables automated trading for traders. Using the proprietary MQL4 language from MetaQuote, traders can program their trading strategies and develop custom indicators.

 

6. Security: MT4 is designed on a very robust security platform. It safely connects users to licensed brokers through its trusted third-party platform.

 

Cons of MT4

 

1. Execution speed: MT4 may not be suitable for high-frequency trading strategies due to the lag in processing fast trades.

 

2. Limited automated trading on web platform: While MT4 shines in terms of automated trading, its web-based platform fails to support it, meaning traders who like web access are out of luck.

 

Pros of MT5

 

1. Advanced Analytical Tools: MT5 provides 38 technical indicators and 80 analytical tools, including graphical objects, for advanced market analysis. The ability to display up to 100 charts at a time and analyze price movements in 21 timeframes means that even the smallest price fluctuation can be closely scrutinized.

 

2. Integrated Fundamental Analysis: The platform has built-in means for fundamental analysis, such as an economic calendar and real-time financial news provided by leading global news agencies.

 

3. Market Depth (Depth of Market): MT5 has a Market Depth, or DOM, which shows the current active bids and offers. It has two modes of operation: exchange-fed prices to provide real-time market data and broker-fed prices for over-the-counter trading.

 

4. Custom Tools and Add-Ons: In addition to integrated tools, MT5 allows its users to access a variety of free and paid tools through its marketplace. Traders who have a grasp of coding can build their own custom indicators and their own personalized trading tools.

 

Cons of MT5

 

1. Difficulty for Beginners: Some of the advanced tools in MT5 may be too much for a beginner trader to handle, especially those with limited experience. The learning curve can make it difficult for new users to fully utilize the capabilities of the platform.

 

2. Not Backward Compatible: Programs, including custom tools developed under MT4, will not be compatible in MT5. Inability of backward compatibility might prove to be a limitation for those traders dependent on some MT4 custom indicators or expert advisors.

 

3. Unnecessary Addition Features for Not All Users: For example, MT5 is necessary to access a broader class of financial instruments such as shares, futures, and CFDs on cryptocurrencies; however, for forex-oriented traders, these extended functions are not needed.

 

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Frequently Asked Questions (FAQs)

 

1. Can I use MT4 programs on MT5?

 

  • No, MT4 programs, expert advisors (EAs), and indicators are not compatible with MT5 due to differences in their programming languages. 

 

2. Does MT5 offer more features than MT4?  

 

  • Yes, MT5 offers, among others, more types of pending orders, advanced backtesting, an economic calendar, and more markets.  

 

3. Is MT5 faster than MT4?

 

  • Yes, generally MT5 is faster because it’s multithreaded, meaning its performance in backtesting and data handling is enhanced.  

 

4. Why don’t all brokers support MT5?

 

  • Some brokers stick with MT4 due to its widespread adoption and familiarity among traders, even though MT5 offers more advanced features.  

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