What are the differences between MT4 and MT5, and which trading platform should you use? While MT4 is still the preferred and most popular option catering to all levels, MT5 offers advanced technical features, centralized markets, and top-notch programming capabilities.
MetaQuotes Software Corp is the developer of two popular proprietary trading platforms, namely MetaTrader 4 and MetaTrader 5. MT4 was first introduced in 2005, while its successor followed only five years later.
MT5’s primary attraction, and one of the main reasons it exists, is for allowing investors to trade instruments with more centralized exchanges, namely stocks, options, bonds, and futures.
Despite MT5 being more advanced than its predecessor, MT4 continues to be the most widely adopted trading platform and is a staple among forex traders, particularly. It’s surprising because naturally, in most cases, users prefer to use the advanced version of a piece of software, though MT4 is the exception.
This exception may be that MT4 offers a user-friendly interface while providing most of the necessary functionalities. What MT4 does really well is offer simplicity with a few touches of sophistication. In contrast, asides from the broader range of markets it offers, MT5 is also more superior in technical capabilities.
In recent years, brokers have begun offering this trading platform alongside the old-fashioned MT4, and this can prompt the question to traders on which platform they should use and whether it makes a noticeable difference.
Main technical differences between MT4 and MT5
The table below gives an overview of the main comparable technical parameters of both trading platforms.
|Speed||32-bit single flow platform||64-bit multi-flow platform|
|Number of symbols||1024||Unlimited|
|Order execution types||3||5|
|Depth of market||No||Yes|
|Order fill policy||‘Fill or kill’||‘Fill or kill immediate’ or cancel return|
|Embedded community chat||No||Yes|
|Email system||No attachment||With attachment|
A breakdown of some of the features:
- Pending orders. A pending order is available to either buy or sell an instrument at a future date. MT4 has four types of pending orders: buy stop, buy limit, sell stop, and sell limit. MT5 has six pending orders, including the previous four. The remaining two are the buy stop-limit and sell stop-limit.
- Order execution types. Both platforms have the same execution modes, namely instant execution, market execution, and execution on request. MT5 has one extra mode known as exchange execution, where the platform directs orders to an external trading exchange.
- Hedging/netting. Both platforms allow for hedging or the ability to open multiple buy or sell positions. However, MT5 has a unique perk known as netting. Netting is a feature that allows for separate positions to reflect as one total order.
For example, if someone opened two separate 1 lot positions on a pair, the order would show as one position worth 2 lots.
- Built-in indicators. Common indicators consist of moving averages, MACD, RSI, stochastics, among many others. Here, MT4 provides 30 indicators, 8 less than MT5’s 38.
- Graphical objects. Graphical objects include the likes of the Fibonacci tool, trend lines, channels, etc. MT4 comes standard with 31 of these, while MT5 brings 44.
- Servers. MT4 uses one server engine, while MT5 uses four, namely the access, trade, history, and backup servers.
Programming functions between MT4 and MT5
When analyzing the two platforms, another factor that traders observe are the programming languages for expert advisors and technical indicators. Both platforms use different programming languages, with MQL5 (MetaQuotes Language 5) being superior to MQL4 (MetaQuotes Language 4).
So, from a coding perspective, someone who codes EAs (expert advisors), technical indicators, scripts, and function libraries is likely to choose MT5 for this purpose of having better frameworks.
MT5 is a multi-threaded and multi-currency programming platform that provides real ticks. One of the essential considerations for developing EAs is back-testing capabilities, and this is where MT5 shines through. Back-testing tasks on MT5 execute at faster speeds. The software also contains a much better strategy tester than MT4.
Who should use MT4, and who should use MT5?
The question above purely boils down to preference. MT4 is a no-frills trading platform that any beginner can be fairly comfortable navigating in a short period. We can attribute this reason to the easy-to-use interface, and this is perfect, particularly for beginners.
Even though the user interface is accessible, the trading platform is not necessarily stripped-down because traders can still find many advanced functions. MT4 has a broader appeal – traders of all levels can use the software conveniently. For advanced traders, however, perhaps MT4 comes with plentiful limitations.
Overall, MT5 is a sophisticated trading platform and doesn’t have the same broad appeal that MT4 has. Aside from being a preferred option for EA and technical indicator developers, MT5 is versatile and comes with more additional features than MT4.
These hallmarks are undoubtedly attractive for experienced traders who may find a few specific features beneficial. MT5 may also appeal to traders looking to trade a market not available on MT4 since there is a broader range in the former.
Does the choice of the trading platform really matter?
Do all the bells and whistles affect a trader’s bottom line in any way? Ultimately, what a trading platform primarily must do is execute orders seamlessly and perform sufficient technical analysis. No solid evidence proves that anything extra affects a trader’s profitability in any form.
Whichever platform one uses is preferential, but the rule of thumb could be that MT4 is best for all traders. On the other hand, MT5 is best for advanced traders, EA and technical indicator developers, and those looking to trade a market not available on MT4.