If you are looking to start a forex brokerage or already have a brokerage, one question which must have definitely crossed your mind is the difference between MT4 and MT5. A lot of times, even the most experienced of brokerages confuse these two offerings as being successors of each other; however, the reality could not be further. While both the MT4 and the MT5 platforms allow your clients to trade on the global forex market, each of them arrives with a different set of functions and knowing the difference between them is a crucial factor in your success.
Thus in today’s article, we will share with you an in-depth comparison between the MT4 and MT5 platforms so that you can decide which one suits your requirements better. Without further ado, let’s get started.
What Is MT4 and MT5?
Before we dive deeper into the comparison between these two platforms, one of the first and frankly most important aspects to understand is the essential functions they offer and the market conditions which motivated their development.
MT4, also known as MetaTrader 4, is a trading platform which was released by MetaQuotes Software in early 2005 to give traders across the world the opportunity to trade in the global forex market. Designed with a beginner first mindset, MT4 quickly became the go-to trading platform for brokers who wanted to execute global forex trades. Due to its simplistic design and backward compatibility, MT4 still is a first choice for many brokers globally.
Contrary to popular belief, MT5, which was released in 2010, is not an updated version of MT4 but rather an independent offering in its own right from the house of MetaQuotes. MT5 was designed with a more advanced and expert mindset, and its primary function was to allow brokers and traders the opportunity to trade in currencies, CFDs, options, futures and more, all of which are not accessible via the MT4 platform. The infrastructure for MT5 is more complex, thus allowing brokers to perform more complicated functions by offering multiple timeframes, pending order types, built-in tools and so on.
Advantages and Disadvantages
Now that you are familiar with the essential features of both the trading platforms and why they were created in the first place, let us take a closer look at the advantages each of them has over the other.
Pros
REAL-TIME ACCESS (MT4)
One of the best features of the MT4 platform and undoubtedly the most profitable for brokers is the access to real-time information. MT4 platform allows the broker to access real-time information from the global forex market and execute trades accordingly. The MT4 platform boasts of a separate window which constantly displays real-time information, such as the various listed currencies and stocks along with their current buying and asking prices. Combined with the Depth of Market feature, the MT4 platform essentially empowers the broker to curate their plans in real-time and accordingly adjust their trades.
TRADE RELEVANT FEATURES (MT5)
The MT5 platform is an immensely powerful tool which not only arrives with a variety of features already present in the MT4 platform, but it takes them up a notch via inclusions such as four different order execution types, options to have multiple trading positions and so on. For instance, the MT5 platform allows traders four different order execution types, namely Request, Instant, Market, and Exchange; in contrast to only one type being present in the MT4 platform. Along with this, the MT5 platform additionally allows you to have numerous open positions such as opposite and or same direction within the same trading instrument.
IMPECCABLE SECURITY AND STABILITY (MT4)
Since 2005, the MT4 platform has won several awards and accolades across the globe for the platform’s impeccable safety and stability features. A 129-bit key encrypts all the data present in the platform, along with communications between the client and server. The key additionally supports RSA digital signatures, which ensures that your IP (Internet Protocol) address remains hidden at all times while trading using this platform. Along with security, the platform also allows for high stability, which sets the stage for speed execution, meaning you can execute trades at a faster pace and keep up with the pulse of the market.
CHARTING AND PREDICTING (MT5)
One of the key determinants of a successful trade is being able to expertly analyze the market movements and forecast the trend. However, in order to run this level of analysis, traders often need access to sophisticated tools which are missing from the MT4 platform. On the other hand, the MT5 platform comes equipped with a variety of tools and data analytics plugins which allows you to seamlessly run an expert analysis of market trends and forecast price movements, setting the stage for more profitable trading.
Some of the salient features of the MT5 platform include
- More than 100 charts can be opened and operated at the same time 21 timeframes can be simultaneously run to execute orders and analyze market trends
- 80 analytical objects with built-in technical indicators
- A total of 38 technical indicators and 39 graphical indicators More than 17 display styles to match your trading pace and strategy Access to 4 scaling modes for advanced trading
Cons
However, similar to other trading platforms, both MT4 and MT5 have their fair share of disadvantages and skepticism, the most significant of which are as shared below.
MT4
- Backtesting abilities are limited, especially for high-quality historical data.
- No custom time frames are available.
- The platform lacks the essential feature of social trading.
- The platform is not compliant with high-frequency trading actions.
MT5
- The platform does not support hedging as it has been discontinued.
- Custom indicators arrive with bugs that need to be addressed.
- MQL5, which is the coding language for MT5, is complicated to understand and troubleshoot.
Comparison B/W MT4 VS MT5
| FEATURES |  |  |
|---|---|---|
| Partial Order Filling Policies |  |  |
| Order Fill Policy | Fill or Kill | Fill or Kill Immediate or Cancel, Return |
| Pending Order Types | 4 | 6 |
| Depth of Market | | |
| Times & Sales ( Exchange Data ) | | |
| Technical Indicators | 30 | 38 |
| Graphical Objects | 31 | 44 |
| Time Frames | 9 | 21 |
| Economic Calendar | | |
| Email System | | |
| Transfer Funds Between Accounts | | |
| Embedded MQL5 Community Chat | | |
| Strategy Tester | Single Thread | Multi-threaded + Multicurrency + Real ticks |
| Multilingual Unicode | | |
| Netting | | |
| Hedging | | |
| Symbols / Securities | 1024 | Unlimited |
| Supported Markets | Forex | FOREX / Futures / Options / Stocks / Bonds |
| Exchange Trading | | |
Conclusion
In conclusion, both the MT4 and the MT5 platforms are advanced trading tools preferred by brokerages across the globe. Now that you have the facts in front of you, which one would you prefer to choose for your brokerage? Let us know in the comments section down below.
