For all Forex traders, the decision of which broker to sign up with often rests heavily on their Forex trading platform offering.
A trading platform is software specifically designed to facilitate currency speculation on the global Forex market, and such platforms are typically equipped with additional analytical features, and have varying degrees of execution speed and operational complexity.
By far the most popular trading platform to date is the MetaTrader suite from MetaQuotes, which consists of MetaTrader 4 (MT4) and its most recent updated version, MetaTrader 5 (MT5).
In this article, we explore the main differences between the MetaTrader 4 and MetaTrader 5 platforms, allowing South Africans to select the option which best suits their trading needs, strategies and experience levels.
MetaTrader 4: the most popular Forex trading platform
MetaTrader 4 (MT4) is a trading platform that was created by MetaQuotes in 2005 and is still in use today.
Despite the fact that it is most frequently linked with forex trading, MetaTrader 4 may be used to trade a variety of markets, including forex, indices, cryptocurrencies, and commodities, through the use of contract for difference (CFD) trading.
Comprehensive analytical capabilities
MT4 is immensely popular due to the fact that it can be completely customized to meet the specific trading needs of any individual trader.
Furthermore, it can be utilized to automate your trading through the use of algorithms that open and terminate deals on your behalf based on a list of predefined parameters.
When it comes to price analysis, MT4 has a wide range of built-in indicators and charting options. In this platform, there are more than 30 built-in technical indicators, including major trend and volume tools such as the MACD, RSI, On-Balance Volume (OBV), Fibonacci retracements, and more.
For each currency pair, a chart can be displayed in one of nine different timeframes, ranging from one minute to monthly. Additional charts and indicators can be found in the MQL4 community, and many traders also create their own.
Traders can use advanced chart analysis, mathematical tools, and drawing objects to analyse price movements of all kinds. In addition, these charts can be highly customized to meet the specific needs of each trader. Different trader profiles can be used to store them.
Flexible trading orders
Traders can choose from a variety of trading orders and ways of execution to build and apply their own trading strategy. Two market orders and four types of pending orders are supported by MT4's platform. Additionally, traders have a wide range of options to choose from when it comes to transaction execution modes.
Forex trading requires risk management measures to be successful. To minimize downside risks, two types of stop orders are available in MT4: take profit orders and trailing stops.
As soon as the market swings against the forecast, a stop-loss order will close the trade. When the price reaches a pre-determined level, traders can take profit and close the position. Placing these orders is a breeze.
The "Toolbar" window or the chart can be used to initiate orders. Their deletion and modification are both simple and painless tasks.
Real-time market access
MT4 is a currency trading platform that provides real-time access to forex quotes and trade execution.
The "Market Watch" pane displays all of the currencies and securities that a trader has chosen to trade through a broker. The real-time bid/ask quote is also shown with the security symbol.
The spread, contract size, margin currency, and margin percentage can all be viewed from this window.
"Depth of Market" provides traders about market activity in real time. In the market depth section, for example, the number of purchase or sell orders for a currency pair at different prices can be viewed.
MetaTrader 5: advanced functionality
Multi-asset trading platform MetaTrader 5 (MT5) was launched by MetaQuotes in 2010. The MQL5 programming language was used to construct the MT5 platform, which has a wide range of features.
The platform's redesigned iteration, which was introduced later, has improved functionality and allows you to trade a wider choice of products. That is to say, in addition to trading currencies, you may use the MT5 platform to trade equities and commodities.
Additional trading features
One of the most advanced and feature-rich trading platforms on the market, MetaTrader 5 offers a wide range of options for trading and order types, as well as a variety of execution styles and Market Depth. Hedging in forex trading is accomplished through the order accounting approach.
Users can open many locations in one instrument, either in the same or opposite direction, using this method.
In addition, there are four ways to execute orders on the MT5 platform. Request, Market, Instant, and Exchange are the four options. Trades involving the use of stock tools fall under the purview of type IV Exchange.
Advanced algorithmic trading
The MT5 platform's robot or algorithmic trading capability is the best and most intriguing. Trading on your behalf is handled by automated systems. You're only required to pick a plan and write down the specifics. Your trades would be carried out by the robot, which would follow your directions.
Algorithmic trading is possible because of the MQL5 environment It gives you the ability to create, test, and fine-tune trading robots to meet your own trading requirements.
It is also possible to execute orders more quickly in the MQL5 environment than on the MetaTrader 4 (MT4) platform. Apart from allowing you to hire sophisticated expert advisors, the MT5 environment also makes it easier to process enormous amounts of data.
Who should use MetaTrader 4?
Beginners and those looking for a more user-friendly Forex trading environment will benefit most from MT4.
MT4 was designed with ease of use in mind. MT4 is the more straightforward option because it provides only the resources you require and none of the more complicated features you don't. This makes it the better choice for casual and beginner traders.
Nine different time frames are available for chart analysis in MT4. MT5 on the other hand offers a whopping 21 alternative time frames, which is a significant improvement over MT4's limited selection.
Many traders do not find these customizable options useful. For forex traders, MT4 has a wide range of features and functions that are tailored to their needs. As a result of this, MT4 is the most popular software platform for forex traders.
Buy stop, sell stop, and sell limit are the four most common order types in MT4. It's common for most traders to use these order types because they minimize risk and give them more control over how they enter and exit positions.
If you're trading on MT4, you're probably looking for an easy-to-setup platform that doesn't require much in the way of custom programming or complicated set-up procedures.
Because of this, MT4 is a great choice for traders who are new to the market or don't want to spend time learning how to program their own trading strategies.
Who should use MetaTrader 5?
Contract-for-difference (CFD), stock, and futures trading can all benefit from MT5. A wide range of characteristics may not be useful to every trader, but if you trade a wide range of assets, it may deliver higher value.
Although MT5 can still be used to trade forex, the features and tools used to examine forex charts are not as comprehensive, thus you'll likely lose performance when using MT5 for this type of trading.
MT5, on the other hand, provides a significant increase in the number of time frames available compared to MT4.
These adjustable features are optional for many traders. Although these time frames are less frequently used, some traders and particular types of trades, such as CFDs, benefit substantially from access to them.
If you're a more experienced or diverse trader, this knowledge could be vital to making informed decisions.
Also included in MT5 are tools like an economic calendar that allow you to keep tabs on the latest developments in the financial markets around the world. However, these new features also necessitate a more complicated platform and a steeper learning curve.
For many beginning traders, MT4's simplicity and stripped-down capabilities are more appealing than MT5, which tends to attract more experienced traders who are looking for greater resources and platform variety.
Conclusion
Both MetaTrader 4 and MetaTrader 5 are excellent trading platforms that offer a wealth of features, fast execution and access to the Forex markets.
However, which of the two platforms you choose to use will ultimately depend on your trading goals and your experience level.
Pure Forex traders, beginner traders or those simply seeking a more straightforward interface will prefer MetaTrader 4, which offers everything required to trade the Forex markets successfully.
More advanced traders seeking a customizable interface along with access to a greater variety of tradable assets will prefer MetaTrader 5 for its additional features, and charting capabilities.
Either way, beginner traders should certainly begin their trading journey using MetaTrader 4, and consider upgrading to MetaTrader 5’s more advanced environment as their needs and capabilities evolve.
