The development of online trading platforms has come a long way since their inception. Today, numerous online brokers offer different services and trading instruments and picking one can be challenging. Furthermore, platforms have gotten so good that choosing between different generations of the same platform, such as MetaTrader 4 and MetaTrader 5, can be more complex than you'd imagine.
MetaTrader is an online trading platform that MetaQuotes Software first developed in 2005 and licenses to online brokers who make it available to their clients. You, in turn, use it to automate your trading and access analytical tools that aid in trading. We'll be looking at the differences between MT4 and MT5 and what makes each unique.
Backtesting is the process of testing how well a trading strategy works against historical data and determining how well-suited it is before implementing it. It helps you ensure that it will perform as expected by enabling you to see possible outcomes while allowing you to make changes as need be. Fortunately, both MetaTrader platforms have this feature, but that's where the similarities end.
MT4's backtesting feature only allows you to test a single strategy, and the process is slow. In contrast, the MT5 backtesting features enable you to test multiple scenarios quickly and efficiently, exponentially speeding up your workflows.
2. Programming Language
MT4 is based on the MQL4 programming language. This was Metaquote's first iteration of their proprietary programming language, which gave them notoriety. However, MetaQuote has expanded on this capability with MT5 by simplifying the coding language, making the platform much faster, and allowing for black-box programming.
The new MT5 language is called MQL5, which is fully compatible with all of MT4's features and functions. However, it's good to note that you cannot run MQL4 on MQL5. Furthermore, the new programming language used on MQL5 is much faster and enables you to multitask better than the first iteration.
3. Technical Support
As hard as it is to believe, MT4 offers no technical support to its users. However, MT5 comes with excellent technical support, and you no longer have to rely on the MetaTrader community to solve issues. You can reach the support team in one of their many offices worldwide, depending on which one is closest to you.
4. Order Types
Another difference between the two platforms is the types of orders you will get on each. MT4 has four order types: buy limit, sell limit, buy stop, and sell stop. While on MT5, you not only get the four order types on MT4 but have an additional two, the buy stop limit and sell stop limit. This significant difference impacts how you create your trading strategies and increases the number of ways you can earn.
5. Depth of Market
MT5 offers DOM research on its platform. DOM measures the demand and supply of liquid tradable instruments based on how many open buy and sell orders are on a given asset. The more there are, the deeper and more liquid a market is and the better situational awareness you have. On the other hand, MT4 does not offer this feature, which can limit your market understanding of a particular instrument.
6. Economic Calendar
An economic calendar is another situational awareness feature offered by MT5 but absent on MT4. It's a schedule of all significant economic dates with events that could influence the market's movement. It allows you to anticipate these movements and, in some instances, to relocate your portfolio for the least impact from the events. This is an excellent strategic tool and feature that MT4 lacks.
When analysing trade patterns, you use timeframes to visualise how the market has reacted over a certain period. MT4 gives you nine different time frames you can use, with the longest being four months and the shortest a single minute. However, MT5 expands on this capability and more than doubles these traditional timeframes. This gives you more ways to visualise trading information and increases your probability of identifying trading patterns.
Undoubtedly, the trading industry has come a long way from what it used to be just a few years back. You have more trading platforms and instruments options, and trading information is readily available. And as a testament to how things have changed for the better, MT4 and MT5 are different generations of the same platform, and most traders find it challenging to pick one. But we hope it will be much easier after reading this piece.
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