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MT4 vs. MT5: Which Forex Trading Platform Should You Choose?

   

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If you’re involved in forex trading, you probably have at least some familiarity with the MetaTrader 4 and MetaTrader 5 platforms. These software solutions rank among the most popular trading platforms for a wide range of traders and advisors, thanks in large part to the value of their tools and resources when it comes to evaluating positions and taking action.

Although their names might suggest that MT5 is just an updated version of MT4, the reality is that these two solutions offer different functions and features that serve distinct trading audiences. Choosing whether to use MT4 versus MT5 can depend on your background and your trading goals, among other factors.

Here’s a look at how these platforms differ, and how to choose the right one for you.

What Types of Assets Do You Want to Trade?

The biggest overall difference between MT4 and MT5 is the types of traders the platforms tend to attract. MT4 was designed specifically for forex traders, and its features and functionality reflect this. For this reason, MT4 is the preferred software platform for traders primarily focused on the forex market.

MT5 has broader applications in contract-for-difference (CFD), stock, and futures trading. As a result, it has a broader range of features that may not be relevant to every trader—but if you trade multiple types of assets, it could provide better value for your trading goals. Keep in mind that although you can still use MT5 to trade forex, the features and tools used to analyze forex charts aren’t as robust, so you will likely sacrifice performance when using MT5 for this type of trading.

Do You Want Access to the FIX API?

The Financial Information eXchange (FIX) API is an important tool for traders seeking real-time information related to financial securities. The FIX API is used by both market regulators and traders to share important information before and after trades, as well as information that confirms new orders and executed trades. 

A FIX API integration offers a number of benefits to traders. Most importantly, traders have greater access to financial information when trading on a platform that offers FIX API integration—and the formatting of this information is standardized to streamline communications across any language barriers. The FIX API also makes it easy to build black-box strategies or private algorithms to assist in forex trade analysis.

If you want to use the FIX API, you’ll need to use the MT4 trading platform. FIX API integration is not offered through MT5.

Chart Time Frame Offerings

MT4 was built for simplicity. Casual and beginner traders likely don’t need access to complex and granular time frame data, which makes MT4 the simpler option, providing the resources you need and none of the complicated features you don’t. 

With MT4, traders can choose from nine different time frames when conducting chart analysis. MT5, by contrast, offers 21 different time frames, representing a massive expansion on MT4’s offerings. For many traders, these customizable options are unnecessary. But some traders—as well as certain types of trades, such as CFDs—benefit greatly from access to these less commonly used time frames. More experienced or diverse traders might consider this information crucial to executing well-informed trades.

Number of Order Types

MT4 offers four basic order types: buy stop, buy limit, sell stop, and sell limit. For most traders, these order types are enough to execute your trading strategy while minimizing your exposure to risk and asserting greater control over how you enter and exit your positions.

MT5 offers these along with two others: buy stop-limit and sell stop-limit orders. This gives traders greater flexibility in how price movement can trigger buys and sells. Experienced traders may frequently use these order types, but they’re likely to be utilized less often by beginners and casual traders.

Programming Language

MT4 and MT5 each use their own custom programming language, which provides different trading capabilities and customizations depending on your trading needs. On MT4, though, there’s a greater assumption that traders will be seeking a platform that can be quickly installed and launched, requiring minimal steps to set up functionality or develop a trading program.

This makes MT4 ideal for beginning or amateur traders, or for traders who aren’t interested in creating their own scripts or algorithms to support their trading strategy. MT5, by contrast, has a more complex programming language, but it also offers the ability to write or alter scripts. 

On MT5, trades can also be executed with a single function, unlike the user experience offered on MT4.

Less Commonly Used Features

As you consider the better fit when it comes to MT4 versus MT5, pay attention to smaller criteria that may affect your trading experience. For example, both platforms offer hedging in certain trades, but only MT5 offers netting, which some traders lean on heavily to control their relative risk exposure. 

MT5 also offers slightly more technical indicators than MT4, as well as tools such as an economic calendar that helps you track relevant news from various foreign markets. But again, these expanded offerings also result in a more complicated platform, and a greater learning curve. 

MT5 also offers features such as a multithreaded strategy tester, fund transfers between accounts, and an embedded community chat—features that MT4 doesn’t offer. These features won’t matter to every trader, but you’ll want to evaluate your needs to determine if this functionality offers any value.

Conclusion

Ultimately, when it comes to MT4 versus MT5, the choice is a matter of personal preference. To determine the best solution, look at your trading habits and preferences and consider which solution offers a better fit for your needs.

Many beginning traders prefer the simplicity and stripped-down features of MT4, whereas MT5 tends to attract more experienced traders who are seeking expanded resources and platform versatility. 

Keep in mind, too, that you might start out benefiting most from MT4, only to realize later on that you’re ready to switch over to MT5. Wherever you’re at in your trading career, make sure your platform of choice is going to serve your trading goals.

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Disclaimer:

The information provided herein is for general informational and educational purposes only. It is not intended and should not be construed to constitute advice. If such information is acted upon by you then this should be solely at your discretion and Valutrades will not be held accountable in any way.

This post was written by Graeme Watkins

CEO Valutrades Limited, Graeme Watkins is an FX and CFD market veteran with more than 10 years experience. Key roles include management, senior systems and controls, sales, project management and operations. Graeme has help significant roles for both brokerages and technology platforms.

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