In the world of trading, there are many choices you will make. How much to risk per trade? Which is the best market at a particular moment, or even how far to set your stop loss. And yet, before answering any of these comes one of the most important decisions, and that is choosing a platform, even choosing between versions of platforms as is the case with MetaTrader.
So, from all the offers. Which is the best trading platform?
The answer to that question is not easy. Right away, several options come to mind. From cTrader to Sterling, and apps like Ninja trader. Yet the name considered to be the gold standard is typically MetaTrader.
In this guide, we will look at the two iterations of MetaTrader and analyze why both have become so popular for retail and institutional traders alike.
What is MetaTrader?
MetaTrader is software that was developed by MetaQuotes in the year 2005. As the world turned towards digitalization, financial markets went online. This created demand for online-based trading software.
MetaTrader became popular due to its user-friendly trading interface. Online brokers at the time adopted and licensed the technology, and to this day, continue to hold dominance in the market.
Most brokers across the globe offer some version of the MetaTrader software whether it’s MT4 or MT5.
There are also mobile versions of the software, which allow traders to trade on the go.
MetaTrader 4 (MT4)
Released in 2005, MT4 is undoubtedly the most popular platform. MetaTrader 4 is a forex trading platform that is used by most retail traders. This platform includes all elements that a brokerage house should offer.
MetaTrader terminal allows traders to have a flexible trading environment, mobility, availability of trading tools, indicators, amongst other features. Some statistics indicate that around 90% of retail forex traders use the MetaTrader 4 platform.
So forex brokers with MT4 functionality dominate the retail currency markets. This truly is a case of not fixing something that isn’t broken.
The greatest feature of MT4 is MarketWatch. A place where traders are able to see the list of available assets for a particular broker.
In addition to this, MT4 gives traders free technical analysis by using indicators and trend lines. That is why the platform also offers algorithmic trading and trade copier services.
MetaTrader 5 (MT5)
MetaQuotes released MetaTrader 5 in 2010. By principle, it’s the same as MT4. It comprises the same user functionalities and the basic tools.
MT5 came out in 2010, or five years after MT4. It is MetaQuotes’ latest trading platform. Most brokers around the world offer an iteration of the software in their offering.
MT5 is described as an all-in-one solution. In part because MT5 offers multi-asset trading, an array of tools as well as a modern look with the ability to open hundreds of charts.
There are various types of MT5 forex brokers. Many don’t utilize the platform for assets beyond forex and CFDs.
Differences between MT4 and MT5
The main difference between MT4 and MT5 (in Tradeview’s case) is that traders are able to trade on exchange or “real” equities on MetaTrader 5, rather than just CFDs on stocks.
Typically on both MT4/MT5, brokers only allow users to trade via CFDs. However, it should be mentioned that Tradeview has been offering real on-exchange stocks trading for several years. As the pandemic has heightened the demand for stocks, this has been a very popular offering.
Traders are able to access equities listed on the major indices in the United States, this includes the likes of Tesla, Facebook, Amazon, Gamestop, and even recent additions like Coinbase.
For Forex traders, both platforms provide access to over 300+ currency pairs, with commodities and Cryptocurrencies also available.
Pros and Cons of Metatrader 4 and Metatrader 5
- MT4 is suitable for retail traders who seek access to CFDs in all currency pairs.
- Multi-device functionality like Windows, Mac, Linux, Android, and iOS.
- User-friendly interface
- Technical trading indicators
- Access to expert advisors
- MT4 does not provide a custom timeframe in their trading platform.
- Traders cannot enjoy automated trading through the web trading platform.
- State-of-the-art encryption ensures a high level of security.
- Backtesting and copy trading features.
- The messaging segment enables real-time contact between the broker and its clients.
- On-exchange equities
- No hedging
- MT5 is made up of a new code. Custom programs created for MT4 need to be re-written for MT5.
Both platforms are robust and user-friendly for traders at any level. From the pros who want to use expert advisors, or even create their own robots, to beginners who simply want to draw support and resistance lines. MetaTrader software can provide the tools you need.
Before opening a live account, you are invited to test out a Tradeview demo account to see if you are comfortable with the platform. Feel free to download this here.
Senior Market Analyst