MetaTrader 4 (MT4) and MetaTrader 5 (MT5) are two of the most popular trading platforms used by traders around the world. If you’re new to online trading, you might wonder what the difference is between these platforms, and which one is better suited to your needs. Although both are created by the same company, MetaQuotes, MT4 and MT5 have some key differences. Let’s take a closer look.
What Are MT4 and MT5?
MT4 was launched in 2005 and became the go-to platform for forex trading. It offers powerful tools for analyzing markets, executing trades, and managing accounts. MT5, released in 2010, is the newer version and includes additional features, making it more versatile for different types of trading. However, it’s not simply an “upgrade” from MT4 — the two platforms are built for slightly different purposes.
Core Differences
1. Markets Available
One of the main differences between MT4 and MT5 is the type of markets you can trade on.
- MT4 is primarily designed for forex (foreign exchange) trading, making it ideal for traders who are focused on currencies.
- MT5, on the other hand, is a multi-asset platform. This means you can trade not only forex, but also stocks, commodities, indices, and even cryptocurrencies. If you’re looking to diversify your trading into different markets, MT5 offers more variety.
2. Order Types
When it comes to placing trades, MT5 provides more options than MT4.
- MT4 has four types of pending orders: Buy Limit, Sell Limit, Buy Stop, and Sell Stop. These are enough for most traders, especially in the forex market.
- MT5 adds two more: Buy Stop Limit and Sell Stop Limit. These additional order types give traders more flexibility in setting their strategies, especially in more complex markets like stocks and futures.
3. Technical Analysis Tools
Both MT4 and MT5 are packed with tools to help you analyze the market. However, MT5 offers more advanced features.
- MT4 comes with 30 built-in technical indicators and 9 timeframes, which are more than enough for basic analysis and strategy development.
- MT5 steps it up with 38 technical indicators and 21 timeframes, allowing for deeper market analysis. MT5 also offers more drawing tools, helping traders create more detailed charts.
If you prefer to work with more in-depth tools and a wider range of indicators, MT5 has the edge here.
4. Hedging and Netting
One of the most important differences between the two platforms is how they handle positions.
- MT4 supports hedging, which means you can open multiple positions in the same asset, both buying and selling at the same time. This is useful for traders who want to protect against losses by opening positions in opposite directions.
- MT5 supports both hedging and netting. Netting is the method commonly used in stock and futures markets, where only one position can be open at a time for each asset. If you try to open a new trade, it will either close the existing position or combine the two.
For forex traders, MT4’s hedging system is often preferred, but if you’re trading in other markets, MT5’s flexibility with netting can be beneficial.
5. Programming Language
Both platforms allow traders to automate their strategies using algorithms, but they use different programming languages.
- MT4 uses MQL4, a simpler language designed for forex trading. There are thousands of custom indicators and automated trading systems (known as Expert Advisors) available for MT4 users.
- MT5 uses MQL5, a more powerful language with additional features. While MQL5 is more complex, it also allows for more sophisticated programming, particularly for traders who want to create intricate automated strategies.
If you’re already familiar with MT4’s programming, switching to MT5 might require some learning, but for traders interested in advanced automation, MQL5 is a strong tool.
6. Economic Calendar
MT5 has an integrated economic calendar, which is a handy feature for traders who want to keep an eye on important financial news and events that could impact the markets. MT4 does not have this built-in feature, so traders have to rely on external sources for this information.
Which Platform Is Right for You?
- If you’re a forex trader and prefer a simple, reliable platform, MT4 is often the best choice. It’s well-established, easy to use, and perfect for traders who focus solely on forex markets.
- If you’re looking to trade a wider range of assets and need more advanced tools, MT5 offers additional features that can enhance your trading experience. Its versatility makes it a better choice for traders who want to explore other markets like stocks, commodities, or cryptocurrencies.
- For algorithmic traders, the choice depends on the complexity of your strategies. MT4 is great for basic automation, while MT5 offers more power and flexibility for advanced automated trading.
Conclusion
MT4 and MT5 are both excellent trading platforms, but they serve slightly different purposes. MT4 remains a favorite for forex traders due to its simplicity and widespread use. MT5, however, is gaining popularity for its multi-asset support and advanced features. Whether you’re a beginner or a seasoned trader, understanding the differences between these platforms will help you choose the one that best fits your trading style and goals.