If you're in the world of forex trading or online trading, you've probably heard of the two popular trading platforms: the MetaTrader 4 (MT4) and the MetaTrader 5 (MT5). Both platforms are developed by MetaQuotes, a software company that specializes in creating forex trading tools for traders. But what exactly is the difference between these two trading platforms? In this blog post, we will dive into the key differences between the MT4 and MT5 trading platforms and why these differences matter.

Overview of MT4 and MT5

First, let's start with a quick overview of each platform. The trading platform MT4 was released in 2005 and quickly became the industry standard for forex trading. It's a reliable and user-friendly platform with a wide range of features. This allows traders to create and execute trading strategies. MT5, on the other hand, was released in 2010 and was intended to be an upgraded version of MT4. It has all the features of MT4 but with more advanced tools for market analysis. MT5 also allows traders to trade other instruments besides forex, such as stocks and futures.

User Interface

One of the most noticeable differences between MT4 and MT5 is the user interface (UI). MT5 has a sleeker and more modern design compared to MT4. The buttons and icons on MT5 are bigger and more straightforward, making it easier to navigate for beginners. On the other hand, MT4's UI is more straightforward and traditional, which many traders may prefer.

Although both platforms have similar layouts, MT5's design is more customizable than MT4's. With MT5, traders can change the colors, fonts, and charts to suit their preferences. MT4 offers a limited choice of customization options and doesn't include upgrades like charting windows, meaning it may be more challenging for traders to analyze multiple connections.

Compatibility

A significant difference between MT4 and MT5 is compatibility with trading instruments. MT4 is a forex trading platform designed exclusively to trade on the forex market, with no support for futures and stocks. MT5, on the other hand, is a multi-asset platform, allowing traders to trade in additional markets.

Another difference lies in backward compatibility—a system of converting older codes to newer versions. This is critical, especially for traders who have already built trading robots or expert advisors on MT4. Unfortunately, MT5 does not support backward compatibility, which means that traders must rewrite their existing codes to function on the new platform manually.

Market Analysis

The differences in market analysis tools are probably the most significant gap between the two platforms.

Many often describe MT4 as a simple and functional platform, suitable for traders who do not need in-depth market analysis. The four most popular chart types, the Moving Average Convergence Divergence (MACD), and 30 technical indicators provided more than meet the needs of a regular trader.

MT5, on the other hand, has many more features to provide more advanced charting options and sophisticated tools for market analysis. A new improvement seen on MT5 is "netting" – netted trade reporting, which allows traders to reconcile positions and avoid duplicating margin requirements. It also includes 21 additional timeframes and 38 technical indicators, giving traders more flexibility to analyze the markets.

If you're an experienced trader who relies on technical and fundamental analysis, then MT5 is likely to be a better choice for you. It provides various advanced tools not found in MT4, including 6 pending order types, depth of market, and real-time market depth analysis. These features allow traders to make better-informed decisions based on more comprehensive analytical information.

In contrast, traders who prefer on-the-go trading or who are new to the industry may prefer MT4. It has an easy-to-use interface and is packed with all the essential elements needed to start trading and stay informed.

Execution Speed and Security

Speed and reliability should always be essential factors when selecting which platform to use. MT5 has well established itself as a faster platform, providing two execution modes such as market and instant execution. Traders can use either execution method depending on the market's volatility and their trading style. It gives traders a suitable trading experience by reducing orders' execution time, reducing slippage, and increasing precision.

Another crucial improvement characteristic of MT5 is the handling of order types. It supports every conceivable trade type, including four order execution modes, one-click trading, and four pending orders. It provides more comprehensive risk management options, making it a more secure and stable platform for trading.

Although MT4 also processes transactions at a lightning-fast pace, it lacks some of the advanced features in MT5, making it less competitive in terms of execution speeds and security options.

Backtesting and Strategy Development

Another significant difference between MT4 and MT5 lies in their backtesting and strategy development capabilities. While both platforms support automated trading and the use of expert advisors (EAs), MT5 takes it a step further. MT5's strategy tester features multi-threaded optimization, allowing for faster and more accurate backtesting of trading strategies. Additionally, MT5 supports the development of complex EAs using the MQL5 programming language, offering more advanced functionalities compared to the MQL4 language used in MT4. This enhanced capability attracts algorithmic traders who rely heavily on automated trading systems.

Community and Marketplaces

Both MT4 and MT5 platforms have thriving online communities and marketplaces. These enable traders can access a wide range of indicators, EAs, and custom tools developed by third-party providers. However, MT5 has a broader selection of add-ons and a more active community due to its newer release. Traders who rely on ready-made solutions or seek assistance from the community may find MT5 to be a better fit for their needs.

Which Platform Should You Choose?

Choosing the right trading platform is essential for traders to execute their strategies effectively. While both MT4 and MT5 platforms offer powerful tools and features, they have distinct differences that cater to different trading styles and preferences. MT4 provides a simplistic yet efficient trading experience, primarily focusing on Forex trading, while trading platform MT5 offers a more comprehensive platform with expanded asset classes and advanced functionalities. Understanding these key differences will help traders make an informed decision based on their individual requirements and objectives.