MetaTrader 4 (MT4) and MetaTrader 5 (MT5) are two of the most widely used trading platforms in the world of online trading. These platforms have revolutionized the way traders access financial markets, offering a range of features and tools to facilitate trading activities. In this article, we will compare MT4 and MT5, highlighting their key differences and helping you choose the one that suits your trading needs. MT4 is the better bet if you are certain you will only be trading forex and CFDs, and you want to keep things very simple. It is a simpler platform and easier to get to grips with. If you trade stocks or more than one asset class, MT5 is definitely the right platform for you.
Because Metatrader 5 was released in 2010, five years after the release of Metatrader 4 and at a time when Metatrader 4 was already very popular, and due also to the number sequence in the platform names, there is a common misapprehension that Metatrader 5 was a new improved version of Metatrader 4, designed to do the same job better. This is not really true at all, although it is a trading platform and back testing machine just as Metatrader 4 is, and the graphical user interfaces look and feel fairly similar. Any adequate Metatrader review should point this out.
1. Trading Instruments
One of the most notable differences between MT4 and MT5 lies in the range of trading instruments they support. MT4 primarily focuses on Forex trading and CFDs (Contracts for Difference), making it a popular choice for currency traders. MT5, on the other hand, expands its offering to include a broader array of assets, such as stocks, commodities, and futures, in addition to Forex and CFDs. If you are looking to trade a diverse portfolio of assets, MT5 may be the better choice.
2. Timeframes and Charts
Both MT4 and MT5 offer a wide range of timeframes for chart analysis. However, MT5 introduces additional timeframes, providing traders with more options for technical analysis. This can be particularly beneficial for traders who rely on advanced chart patterns and time-based trading strategies.
3. Programming and Automation
Both platforms support algorithmic trading, allowing traders to create and deploy automated trading strategies through Expert Advisors (EAs). However, MT5 has a more advanced scripting language called MQL5, which offers enhanced capabilities compared to the older MQL4 language used in MT4. If you are a seasoned programmer or require complex trading algorithms, MT5’s MQL5 is the way to go.
4. Hedging
Hedging is a risk management technique that involves opening multiple positions in opposite directions on the same asset. MT4 is known for its hedging capabilities, making it a preferred choice for traders who use this strategy. MT5, on the other hand, does not support hedging by default. This could be a significant consideration for some traders, depending on their preferred trading style.
5. Economic Calendar and Fundamental Analysis
MT5 offers a built-in economic calendar, making it easier for traders to stay updated on important economic events and news releases that can impact the financial markets. MT4 lacks this feature, so traders relying heavily on fundamental analysis may find MT5 more convenient.
6. Backtesting
Both platforms allow for backtesting of trading strategies, but MT5 offers more advanced and accurate testing options. It can simulate real market conditions more closely, which is valuable for refining and optimizing trading strategies.
7. Multi-Asset Strategy Testing
If you’re interested in testing a trading strategy across multiple assets, MT5 is better equipped for this task. It allows for multi-asset strategy testing, which is not supported by MT4.
Conclusion
In the MT4 vs. MT5 battle, the choice ultimately depends on your specific trading needs and preferences. If you primarily trade Forex and are comfortable with a simpler programming language for algorithmic trading, MT4 might be sufficient. However, if you want access to a wider range of assets, advanced charting options, and more powerful automation capabilities, MT5 is the better choice.
Ultimately, many brokers now offer both MT4 and MT5, so you can experiment with both platforms to see which one aligns better with your trading style and objectives. Remember that success in trading depends not just on the platform you use, but also on your trading strategy, risk management, and market knowledge.
It has to be said that otherwise, there is no reason not to use Metatrader 4, which remains a tried and tested gold standard platform of the industry. It is far more popular than Metatrader 5, and for good reason: it is easy to use and manage and has generally less glitches than its browser-based competitor platforms.
Frequently Asked Questions (FAQs)
1. What is the main difference between MetaTrader 4 (MT4) and MetaTrader 5 (MT5)?
- Answer: The main difference between MT4 and MT5 is the range of trading instruments they support. MT4 is primarily designed for Forex and CFD trading, while MT5 offers a broader range of assets, including stocks, commodities, and futures, in addition to Forex and CFDs.
2. Can I use the same Expert Advisors (EAs) on both MT4 and MT5?
- Answer: No, Expert Advisors (EAs) written for MT4 are not compatible with MT5, and vice versa. The programming languages used for EAs in MT4 (MQL4) and MT5 (MQL5) are different, so you would need to adapt or rewrite EAs to use them on the respective platforms.
3. Which platform is better for algorithmic trading, MT4, or MT5?
- Answer: MT5 is generally considered better for algorithmic trading due to its more advanced scripting language (MQL5), which offers enhanced capabilities compared to MQL4 in MT4. If you require complex trading algorithms, MT5 is the preferred choice.
4. Does MT4 support hedging, and what about MT5?
- Answer: Yes, MT4 supports hedging, which allows traders to open multiple positions in the same asset in opposite directions. MT5, by default, does not support hedging. Traders who rely on hedging strategies may prefer MT4 for this reason.
5. Are there any notable differences in charting capabilities between MT4 and MT5?
- Answer: While both platforms offer a range of timeframes for chart analysis, MT5 introduces additional timeframes, making it more suitable for traders who rely on advanced chart patterns and time-based trading strategies. MT5 also offers more accurate backtesting options, which can be valuable for refining trading strategies compared to MT4.
