If you’re a trader, then chances are you’ve probably come across MT4 and MT5. There is much debate and sometimes confusion, especially amongst new traders, regarding these two prominent trading platforms. The question is: what is better – MT4 or MT5?
After reading this article, the deliberation between which one of these is the superior platform will be put to rest.
What Are MT4 and MT5?
MT4 and MT5 are the abbreviated names of widely used trading platforms Metatrader 4 and Metatrader 5. Both of these trading platforms were developed by MetaQuotes Software Corp. These computer software programs are used for trading financial products with a financial intermediary.
Since its official release in 2005, MT4 has set the industry standard for Forex trading platforms. Nowadays, it would be surprising to hear a brokerage firm that did not offer MT4 as a platform either for direct trading or through an in-house bridge.
MT5 was released in 2009 and, unlike MT4, allows trading in centralized markets. It is theorized that Metaquotes foresaw a stocks and commodities trading boom and so timed the MT5 release to accommodate that market. In a 2019 study, it was found that MT5 was still lagging behind MT4 in terms of popularity. In fact, MT4 topped the list as the most used Forex trading platform at the time. Although this may seem to indicate that MT5 is living in the shadow of its predecessor, it does not necessarily mean that MT4 is the better platform. One reason for this finding may be due to MT5 being less availably offered by financial intermediaries in general.
Many also mistakenly assume that MT5 is just an upgraded version of MT4. This is because of the similar names, similar user interface, and the later release of MT5 by the same developer.
Differences Between MT4 and MT5
The following table compares the different features and functionalities between MT4 and MT5.
● Designed to trade Forex through decentralized markets
● Uses programming language MQL4
● 9 timeframes
● 30 built-in indicators, 2000 free custom indicators, 700 paid
● 4 types of pending orders
● 3 types of order execution
● Order fill policy: fill or kill
● Allows only hedging (no netting)
● Reports in tables only
● Balance or credit transaction
● 31 graphic objects
● Single-threaded strategy tester
● Email system
● Designed to trade stocks, commodities, futures, and options through a centralized exchange but also has access to decentralized markets
● Uses programming language MQL5
● 21 timeframes
● 38 indicators, 44 analytical objects, unlimited charts
● 6 types of pending orders
● 4 types of order execution
● Order fill policy: Fill or Kill Immediate or Cancel Return
● Allows both hedging (by request) and netting
● Reports in Charts (HTML5) and tables
● Balance, Credit, Balance Correction, Commission, Agent, Interest, Charge transactions
● 44 graphic objects
● Multi-threaded strategy testers
● Email system
Additional features not included in MT4:
● Partial order filling
● Automated log file ZIP compression
● Features Depth of Market
● Provides an economic calendar
● Fund transfer between accounts
● Embedded MQL5 community chat
Browsers that support both trading platforms web traders are:
- Google Chrome
- Internet Explorer
- Microsoft Edge
Both MT4 and MT5 are also compatible with all Windows, Mac, iOS, and Android systems.
Extra Features = Better Platform?
From the side-by-side comparison, it appears that MT5 has expanded the capabilities of MT4 and possesses extra features that are not included in MT4. But do more features imply a superior trading platform? In short, it depends.
Deciding which trading platform is better for you largely depends upon what you are trading. So, of course, if you want to trade anything other than Forex, then MT5 would be the better option because MT4 can only trade Forex and does not have access to centralized markets. Commodities, in particular, are mostly traded as futures contracts through a centralized market where full legal ownership is settled at a later date.
It is also important to consider that MT5 complies with the U.S FIFO “no hedging” rule. This rule states that American clients of Forex brokers must deal on a First In First Out basis. It may make MT5 a more suitable option for U.S traders as MT5 will aggregate all positions automatically. However, traders from outside the U.S.A will likely find the inability to execute hedging operations an inconvenience and an unnecessary impediment.
Arguably the most exciting difference amongst traders is the MQL5 language supported by MT5. Although some claim that MQL5 is much harder to learn and less efficient to code the same procedures than MQL4, MQL5 is the more powerful language with more potential. It gives traders the ability for black-box programming, allowing for algorithmic trading. This means users can create trading bots and expert advisors – preprogrammed instructions that execute trades automatically.
There was an update in 2013 that somewhat leveled the playing field for MQL4, allowing it similar Black Box capabilities. However, in 2019, developers announced that they would be ceasing support for MT4, and there would be no further updates. Some may feel learning MQL5 is favorable to MQL4 due to MQL4 being slowly phased out and replaced with MQL5. Programming scripts written in MQL4 are not compatible with MT5, whereas some MQL5 scripts will run in MT4.
In actuality, discussing which trading platform is better maybe a slightly meaningless endeavor. This is because MT4 and MT5 are both powerful platforms designed to serve completely different purposes and thus offer different functions. To determine which is better is to understand which is more suited to the needs of the user.
If you are a beginner trader and only want to trade in Forex, then MT4 is most likely the better choice. It is easier to use and is purpose-built for Forex trading. Another key advantage is that almost every major broker will provide MT4. There is also much more information and tutorials out there on MT4 to get a new trader started.
If you are a more advanced trader and prefer a more versatile trading platform, then MT5 is the one you want. MT5 can trade in both centralized and non-centralized markets. It also has a separate server for access, history, and backup; these make backtesting much quicker and simpler than on MT4. Additionally, its embedded chat function allows experienced traders to discuss strategies.