Before we analyze the differences between MT4 and MT5, let’s speak about the history of these applications. MetaQuotes Software corporation decided to build test trading platforms for currencies, securities, and other resources in 2000. Such software had limited efficiency and was not in great demand among investors.
In 2002, the presentation of the MetaTrader 3 platform with extended functionality took place; such an application lasted for several years.
In 2005, computer engineers created the MetaTrader 4, which instantly became the most common trading environment due to its extensive list of features and simplicity of use.
Specialists showed an updated variant of the MetaTrader 5 in 2010, and it actively replaced its predecessor from the market.
Below we will speak about the effectiveness of MT4 and MT5 and how to collaborate with these terminals.
Some words about MetaTrader 4
MT4 is an advanced online trading terminal. People utilize it to speculate on the costs of major commercial markets, including Forex, goods, indices, and cryptocurrency. It is just a tiny register of available assets.
The popularity of MT4 is due to the product allowing users to develop their automated trading tactics. It is one of the most attractive solutions to automate your trades. MetaTrader is free to download and run. The application, owned by MetaQuotes Software, provides users with current asset costs, price charts, and the ability to place orders and track accounts.
Key features of MT4
MetaTrader 4 was built to retail Forex trading. The product’s popularity is associated with its convenience, versatility, and mobility. The solution has an intuitive design without being overloaded with many buttons. Consider its main properties:
- Auto trading capability: users may use auto-trade tactics with MT4 expert advisors; they are strategic programs that track trends and let you trade in markets with systematic mechanisms. The entrepreneur can install personal advisors and technical indicators, considering his goals and objectives.
- Market targets and access to liquidity: MT4 lets you access real-time Forex quotes and execute trades in parallel. You may also get additional data about currency pairs, such as spread, contract volume, and the number of orders. When supply exceeds selling, it is a bullish trend. It allows the user to expand the purchase of a currency pair due to increased liquidity.
- Plenty of analysis tools: MetaTrader 4 offers built-in charts, technical indicators, and various price analysis tools. More than 30 indicators are available, including crucial volume and trend parameters and countless charts. The platform displays currency pairs on nine different timeframes ranging from minutes to months. Users may analyze charts by examining prices, using mathematical tools, and drawing objects.
- Considerable flexibility with multiple orders: MT4 lets you interact with various market orders, four pending orders, and three trade execution modes in parallel.
- Minimum slippage: it occurs if a filled market or stop loss order is closed at a rate different from the initial rate. It is most often observed in highly volatile markets and can result in severe losses. However, MetaTrader 4 has lightning-fast execution and stability, so this problem rarely occurs.
- Availability of alert functions: the system informs investors if prices in the financial markets have changed significantly. Any events on a national or global scale may lead to price fluctuations. MT4 sends notifications to users via email and a specified phone number, so they are always aware of price changes.
It is an advanced software available to investors worldwide with a client and user side. The broker monitors and manages server operations while retail traders work with client programs to stream prices, chart, and place trades on their accounts. MT4 generates an optimal environment for creating, testing, and optimizing various commercial algorithms.
The trading algorithm on MetaTrader 4
If you plan to check the effectiveness of MT4 on a trial account, you must download the desktop or mobile app. Then begin the installation – the procedure will take approximately 5 minutes. Tap the «File» menu, choose «Open a new profile», and read the prompts. You can practice placing orders with a trial account and studying technical parameters and graphical elements. To begin earning on the MT4, you must complete some stages:
- Open the «Order» tab and place a commitment instantly on the platform.
- Determine the trading pair you plan to trade. Click on the window tab and select «New window».
- Tap the «New order» item on the toolbar. An example of the EUR/USD pair will display, so the user understands how to place an order correctly.
- To earn on the market, you must specify the desired number of operations in the «Volume» column and click «Sell or buy».
- Choose the type «Market execution»; it lets you execute the placement instantly.
- In the dropdown «Type», you can also pick buy or sell algorithms.
You may set up price alerts by opening a terminal window and going to the «Alerts» tab, right-clicking here, and selecting «Create». It will open an editor where you can set up price alerts for different currency pairs. To view all the trades that took place earlier, you need to go to the «Account History» tab.
Strengths and weaknesses of MT4
MetaTrader 4 offers desktop, web, and mobile alternatives. The solution has been translated into more than 20 languages, including English, French, Japanese, Chinese, Russian, etc. The desktop solution successfully analyzes financial markets, performs advanced exchange procedures, launches trading robots, and does copy trading. Let’s talk about its other pros and cons.
The list of advantages:
- Ease of deployment.
- The platform does not overload the computer.
- Comfortable interface.
- Compatible with multiple operating systems, including Windows, Linux, Mac, and Android.
It is essential to remember some downsides of the system:
- Lack of access to total historical data.
- Low execution speed, which creates difficulties in high-frequency trading.
When trading large amounts, users want to have guarantees their finances and personal information are well protected. Forex trading is associated with the risks of hacks and cyberattacks. The MetaTrader 4 system is secure. It encrypts all dealer and server information and hides IP addresses while users trade via the terminal.
Some words about MetaTrader 5
MT 5 platform is an enhanced variant of the MetaTrader 4 system. It has backtesting features that are quicker and more potent than MT4. Besides, it gives a chance for parallel testing of multiple pairs.
MT5 is a complex platform in terms of its structure and functionality, which makes trading difficult for beginners. However, it allows traders to trade Forex, indices, and commodities via CFDs more effectively.
Key features of MT5
The MT5 platform lets experts utilize algorithmic trading applications to automate trades, including trading robots and Expert Advisors (EAs). You may implement your Expert Advisors or import the built-in options. Consider other vital characteristics of the program:
- Market direction prediction: MetaTrader 5 offers a range of analytical instruments to analyze prices comprehensively and predict the probability of cost trends. Besides 80 fixed indicators, the program offers 38 technical and 39 graphical indicators that allow you to comprehend the movement and direction of the industry.
- Modern market depth feature: the app offers a market depth option to find the optimal deal for the selected asset. It informs about the liquidity of securities and how many standing orders to purchase and sell there are in different price categories. The larger the depth, the lower the risk that minor price fluctuations will affect significant transactions.
- Maximum accuracy of fundamental and technical research: MT5 provides various tools for considerable research and integrated reports. They keep track of the start and end worth of the instruments. Reports can also make price predictions with minimal error.
- Auto trading: with this feature, MT5 may trade positions on behalf of the investor, even when the PC is off. Thanks to its automation capabilities, MT5 analyzes a large amount of information and works with orders with little or no user intervention.
MetaTrader 5 is a multi-asset terminal that lets you exchange digital cash and other resources. MT5 functionality with updated market depth functions enables you to earn substantial amounts on trading futures, stocks, and various derivatives. You may also run Forex operations in parallel.
The trading algorithm on MetaTrader 5
Before trading, it is crucial to study all the features and commercial resources of MetaTrader 5 to improve your trading results. It’s also essential to ensure your PC meets the application’s minimum system requirements. If you are already logged into MT5, it’s time to make a bargain. There are a few options for placing orders:
- Tap «Tools» in the menu bar and choose «New order».
- When the «Market Watch» window appears, double-click on the asset you prefer to trade.
- Right-click on the «Trade» tab in the program below and tap «New order».
- Press F9 on the graph of the most attractive resource to have a deal instantly.
The «Order Screen» will appear when you perform the above steps. It contains a tick chart on the left and customizable characteristics on the right side; the tick chart demonstrates the buy and sell prices and the actual spread.
Strengths and weaknesses of MT5
MetaTrader 5 is a modern trading solution that deals with multiple assets. In MT5, specialists have tried to improve the technical analysis, the trial mode, and the order execution parameters. Some functions are comfier than in the past solution. Consider other benefits of the system:
- Easy to navigate interface.
- A comprehensive set of tools to conduct research.
- The ability to utilize eight types of pending orders and 21 timeframes.
- Access to extensive asset groups.
- The presence of an economic calendar as an essential element of the platform.
Such an advanced system also has some downsides:
- Disable hedging for exchange markets.
- Users accustomed to MT4 may need to learn some points as the products utilize different programming languages.
Your headache of finding an excellent investment may quickly disappear once you begin using MetaTrader 5. The robust trading solution makes it easy to place orders and provides the tools, features, and research you need to spot opportunities and control the success of your trades.
Critical differences between MT4 and MT5
MT4 and MT5 have a lot in common. These terminals are designed to meet the needs of the ordinary investor; they have options for market exploration, trade management, and order execution. Users can use different short- and long-term strategies. They track their financial losses with limited orders and gradually build diversified trading portfolios.
Whichever version you prefer, you will have access to various markets and tools. Both systems work successfully in demo trading mode, allowing you to try different business tactics. Let’s discuss the critical differences between MT4 and MT5.
Are there some distinctions between the MT5 and the MT4 interface? It is challenging to notice the dissimilarities visually. Creators paid attention to practically updating the set of functions in the updated version without affecting the design.
There are some distinctions in the main menu, but well-known functions remain the same. You may run the «Market watch» or «Navigator» menu items in both systems. You can also activate an auxiliary menu with timeframes and visible charts.
Work with orders
In the latest version of MetaTrader, people can drag and drop the table-loss (SL) and take-profit (TP) levels with the PC mouse. Such a feature is available in standard mode and when working with one click. The distinction is that the former requires manual confirmation of each change in SL and TP, while the latter requires a quick correction of trading status.
On the MT4 platform, this feature is available only after activating the one-click mode; the price changes instantly. In this regard, MetaTrader 4 and MetaTrader 5 act similarly. But if you disable the one-click selling option in MT4, order modification becomes more difficult. In MT5, in the «Market watch» tab, there is an opportunity to quickly access the «One click trading» panel.
Such parameters help to spot price patterns. Based on the Dow theory, experts came up with models that are used to make forecasts about prices using various algorithms, lines, and mathematical calculations, which are supposed to be repeated over time. MT4 has 30 technical indexes, while MT5 has added eight additional indicators, bringing its total number of indicators to 38.
MT5 endorses 21 timeframes, more than 2x the classic nine periods available in MT4. Ten basic timeframes, as in MT4, are located on the toolbar. To activate the standard period, you must right-click on the graph and choose «Timeframes». You must know you can solve the challenge of unusual periods in MT4 by adding a particular script.
Depending on the conditions of the dealers, MT5 has options that allow you to transfer capital between accounts on a similar business server. It does not apply to MT4, where the transfer is carried out by brokers separate from the MetaQuotes product.
MetaTrader 4 has 31 graphical elements, including lines, channels, the Gann and Fibonacci tools, shapes, and arrows, which allow you to make predictions about future price movements. Speaking of drawing tools in MetaTrader 5, the system offers 44 graphical components such as geometric shapes, channels, Gann, Fibonacci, and Elliott tools.
MT4 does not have an integrated economic calendar, but you can utilize third-party apps to keep up to date with financial news.
MT5 contains an integrated economic calendar with valuable real-time insights about macroeconomic events. It assists traders in staying on top of important financial announcements that could affect the worth of resources. The economic calendar is vital for better trading planning.
While MT4 and MT5 have a lot in common, each product has pros and cons.
Regarding charting tools, each platform offers around 80 technical metrics to help users understand market trends and make proper decisions. However, MetaTrader 5 received more modern charting tools, including 21-time frames (MetaTrader 4 has 9-time by comparison) and more graph objects.
If we speak about business orders, both platforms interact with similar types, but there are differences between MT4 and MT5 functionality. MT4 accepts one position per order type, and MT5 handles multiple positions and complicated hedging algorithms. Thus, MetaTrader 5 will eventually replace Metatrader 4 due to a more extensive set of options.
Company XCritical offers its services to beginners and experienced users since it has a fully functional MT5 terminal in its arsenal.