MT4 vs MT5: Key Differences in the Popular Trading Platforms

In online trading, MetaTrader 4 (MT4) and MetaTrader 5 (MT5) stand as two of the most influential platforms. Developed by MetaQuotes Software, these platforms have offered many traders worldwide a powerful means to participate in the financial markets. But despite their similar names and common developer, MT4 and MT5 cater to different needs and have distinct features. Here's an analysis of the differences between these two platforms.

Historical Context

MT4, released in 2005, was designed predominantly for forex trading. Owing to its ease of use, flexibility, and ability to support automated trading systems (known as Expert Advisors), MT4 quickly gained popularity among both novice and seasoned forex traders.

In 2010, MetaQuotes introduced MT5 as a successor to MT4, with an aim to extend the offerings beyond Forex to include other securities like stocks and commodities. However, MT5 hasn't entirely eclipsed MT4, mainly due to the latter's established user base and compatibility with a vast number of custom scripts and indicators.

Supported Markets

While MT4 was primarily built for Forex trading, MT5 was designed with expanded access to other markets. MT5 enables trading in stocks, futures, options and commodities, in addition to Forex. This extended asset class support in MT5 is particularly appealing to traders who prefer a diversified investment portfolio.

Order Types

MT4 supports three types of orders: market, stop, and limit. On the other hand, MT5 introduces two additional order types: 'Buy Stop Limit' and 'Sell Stop Limit'. The added complexity of these additional order types, coupled with partial order filling policies, allows for the implementation of more nuanced strategies, thereby providing traders with increased control over the order execution.

Technical Analysis and Features

MT4 provides 30 built-in indicators, whereas MT5 offers 38. Furthermore, MT5 has 44 graphical objects compared to MT4's 31. MT5 also supports 21 timeframes, a significant expansion from MT4's 9. These enhancements in MT5 provide traders with a more detailed view of the market. MT5 also comes with features such as Market Depth, Time & Sales (Exchange data), and an Economic Calendar, none of which are offered by MT4.

Programming Language and Automated Trading

MT4 uses MQL4 language for its Expert Advisors (automated trading systems), while MT5 uses MQL5. MQL5 is more versatile and efficient, allowing for more complex strategies, better backtesting, and even standalone applications. The capabilities of the MQL4 language were expanded in 2014, however, the programming language of the MT4 platform cannot be executed on the MT5 platform, which is disadvantageous for traders who want to upgrade. Recognizing the challenges that traders may face in moving from MT4 to MT5, especially due to the lack of direct compatibility between MQL4 and MQL5 scripts, we are proud to provide a specialized conversion service. We offer smooth conversion of customized MT4 indicators to MT5, enabling traders to utilize their personalized trading tools without having to rebuild from the ground up.

Performance

MT4 and 32-bit: The 32-bit architecture of MT4 means it can only effectively utilize 2-4GB of RAM, depending on the system's configuration. This is usually enough for basic and intermediate trading, but when dealing with complex strategies, Expert Advisors (EAs), or indicators, a lack of memory can result in reduced performance.

MT5 and 64-bit: MT5, being a 64-bit application, can effectively utilize a much larger amount of system memory (theoretically up to 18.4 million TB, but practically limited by the actual RAM installed on the computer). This expanded memory usage allows for more complex calculations, the handling of more open trades, and the use of more data in your EAs and indicators.

However, please note that to take full advantage of the 64-bit MT5 platform, and you need to be running a 64-bit operating system on your computer. On a 32-bit operating system, MT5 would still work but will be limited by the memory constraints of the 32-bit system.

Strategy Tester

MT5 features a multi-threaded strategy tester, which allows it to utilize multiple CPU cores to expedite the optimization of an Expert Advisor. Therefore, with a high-performance computer, backtesting in MT5 can be significantly faster than in MT4. Additionally, MT5 provides access to a substantially larger volume of downloadable historical data compared to MT4. This advantage can greatly benefit backtesting strategies that rely heavily on historical data.

Community and Marketplace

Both platforms have online marketplaces where users can buy, sell, or rent trading robots, technical indicators, and other useful trading applications. MT4's marketplace is more extensive, largely because of its longevity. That said, MT5's marketplace has been growing steadily.

Conclusion

In conclusion, they actually differ in many features and target market positioning, so there's not much significance in comparing the merits and demerits between the two platforms. The choice between MT4 and MT5 largely depends on individual trading needs.

Reasons to choose MT4:

· Ease of Use: MT4's interface is user-friendly, making it a preferred choice for beginner Forex traders.

· Established Community and compatibility with third-party scripts: MT4's large, active user base results in abundant third-party plugins, scripts, and troubleshooting forums. Additionally, MT4's compatibility with a wide range of third-party plugins and scripts allows users to extend the platform's functionalities, automate trading strategies, and customize the user experience.

· Expert Advisors (EAs) and Custom Indicators: The availability of a wide array of custom tools developed by the MT4 community enhances the platform's suitability for many traders.

Reasons to choose MT5:

· Expanded Market Access: MT5 offers extended access to various markets including stocks, futures, and commodities.

· Advanced Tools and Features: MT5 includes more order types, additional built-in indicators and graphical objects, a wider range of timeframes, a built-in economic calendar, and the Market Depth feature.

· Enhanced Strategy Testing: MT5's strategy tester uses multiple CPU cores for faster backtesting and optimization. It also provides access to more historical data compared to MT4, making it beneficial for backtesting strategies.

Please contact us if you need to convert your MT4 indicator or EA to MT5.