What are trading platforms?
Generally speaking, trading platforms are third-party software systems that allow investors to open, close and manage their market positions through an intermediary – such as an online broker like NAGA.
Essentially, they give investors an interface to access markets and place trades. These platforms frequently offer an easy-to-use and understand interface that can be very helpful for beginner investors.
The ideal trading platforms can also include many sophisticated tools and features designed to help investors make decisions. These include real-time quotes, live financial news, and interactive charts designed to aid investors.
No two platforms are alike, and when choosing a platform, traders and investors should consider whether the features on offer meet their trading needs. This is where the MT4 vs MT5 question comes in.
In today's always-online world, traders often overlook one element - the availability of the trading platform. That is to say – how mobile-friendly is it? Is it available for the most popular operating systems like Windows, Mac, iOS, and Android?
Now that you have a general idea of what a trading platform is and what it can and (ideally) should do – let us take a deep-dive look into two of the most popular trading platforms around the world: MetaTrader 4 and MetaTrader 5.
The Pioneer - MetaTrader 4
MT4, or MetaTrader 4, is a trading platform that MetaQuotes released in early 2005. The platform gives traders across the world the opportunity to trade in the global forex market. Intuitive and straightforward, MT4 quickly became popular among traders across the globe. If efficiency is the name of your trade game, then MT4 might be just the platform for you.
Often considered the gold standard platform of the retail Forex / CFD (Contract for Difference) trading industry, it covers traders of all experience levels.
New traders appreciate the platform's beginner-friendly elements, such as the copy trading system and automated Expert Advisor apps. The more experienced can take advantage of a full suite of complex analytics, charting tools, and the ability to design their own trading indicators.
Here are some key features of MT4:
- The ability to access all Forex quotes in real-time and execute trades simultaneously.
- MetaTrader4 also has an alert function that informs traders of significant price changes across financial markets. Volatile price movements can sometimes result in losses. To protect traders against these, MT4 sends an email and mobile alert to update you on significant price movements and prompt you to respond quickly.
- The platform has extensive price analysis tools integrated into it, including technical indicators (over 30, to be more precise) and major volume and trend tools.
- Charts, charts, charts: in-built charts and drawing objects help traders analyze all price-related activities. Customized to suit each trader and their requirements individually, helping you identify support and resistance levels, define exit and entry points, forecast price changes, and so much more.
- The ability to take MetaTrader4 with you wherever you go: the MetaTrader4 mobile application allows trading on financial markets via iOS and Android-powered smartphones and tablets.
MetaTrader 5 - The Runner Up
In 2010, MetaQuotes developed and released MetaTrader 5 (MT5). It is a powerful trading platform that allows you to trade stocks, CFDs, forex, and futures. MT5 offers various features to its users, such as automated trading, copy trading, virtual hosting service, and technical and fundamental analysis tools for strategy development.
The platform allows you to open 100 charts simultaneously, and the 21 timeframes enable detailed analysis of even minor price movements. It also offers 80 technical indicators and 44 analytical objects.
MetaTrader 5 checks all the boxes; advanced traders will appreciate the multi-asset, multi-functional platform that provides price data as well as unparalleled technical and analytical tools. Day traders will enjoy a trading platform that's fast, reliable, powerful, and robust.
Key features of MetaTrader 5:
- MT5 offers comprehensive tools for price analysis and forecasting. With its 38 technical and 39 graphical indicators with which to understand the movements and directions of the market better, it is truly a powerful platform.
- The Market Depth feature lets traders see the best bids and offers for a particular asset. It tells you the security's market liquidity and the number of standing buy and sell orders at different price levels. Market depth means the chances of significant trades getting affected by minor price movements are lower.
- Inbuilt advanced reports for analyzing trading activities quickly. These reports help track the initial and final values of the instruments; additionally, they can also forecast price movements with minimal variation.
- Automated trading allows MT5 to trade positions on your behalf even when your device is off. This automation enables the platform to process extensive information from multiple orders faster. Essentially, if you so choose, the platform can execute your goals and needs with little to no intervention from you.
- Availability: MetaTrader 5 offers mobile, desktop, and web versions of the platform.
What's the Difference Between the Two?
MetaTrader 4 and MetaTrader 5 offer various tools for their users, making them the most accessible platforms within the industry. However, there are some differences between the two.
MetaTrader 4 is truly an innovative trading platform. Released back in 2005, it offered traders unparalleled comfort and opportunities. The main idea behind MT4 was to provide an all-in-one platform for Forex trading. Thanks to MT4, forex trading became more efficient and easier to access.
Five years after the roll-out of the MetaTrader 4 trading software in 2005, MetaQuotes released MetaTrader 5. The introduction of MT5 extended the functionality to include more instruments and several other additions.
Some people believe that MetaTrader 5 is an update and direct successor of MetaTrader 4 - this is not exactly true. Instead, both platforms co-exist in the trading markets, offering traders different opportunities. MetaTrader 4 was mostly created for Forex trading. MetaTrader 5 allows investors to trade different types of assets, including CFDs, stocks, and futures.
Key differences between these two platforms include:
- Assets: The first difference between the two platforms, and arguably the most important one, is the target audience. MT4 was designed and programmed specifically for forex traders. MT5 has a broader range of uses, including CFD, futures, and stock trading.
- Submitted orders: MT5 contains two additional order types over MT4 – Buy Stop Limit and Sell Stop Limit; these two extra orders give traders greater flexibility when it comes to minimizing their risk, allowing them greater control over when to leave or enter a trade.
- Time frames: MT4 has a total of 9 timeframes – ranging from one minute to one month. MT5 has a grand total of 21 – from one minute to one year. Traders who wish to focus on technical analysis will appreciate these extra time frames because they can view market patterns and structure in more ways.
- Programming Language: The programming languages of MT4 and MT5 are entirely different and therefore are not backward-forwards compatible. In other words, some applications built for MT4 will not be able to run in MT5 and vice versa.
Is MT5 Better than MT4?
The user interface of the MT4 is straightforward and easy-to-understand. Novice and seasoned traders alike appreciate this functionality. Users also highly value the platform because it is configurable, meaning that you can tailor it to suit your trading requirements.
MT4s programming language (MLQ4) is also more straightforward and superior to program than that of MT5 (MLQ5). Some consider MT4 as the superior platform because of its ease of use and functionality. Forex trading on the MT4 platform is also second to none.
The MT5 platform is, in many ways, an upgraded version of MT4. Seasoned traders will absolutely love its enhanced capabilities and additional components.
They give users an unmatched understanding of the market and help in decision-making. However, all the extra functionalities may appear a little overwhelming to newer users and traders.
Metatrader 5 does have two significant programming benefits over Metatrader 4. First, its backtesting (assessing the success of a trading strategy) functions allow you to test programmed trading strategies and operate significantly faster.
Traders who run many backtests will find this feature particularly helpful as it can save them a great deal of time. It also permits simultaneous backtesting of multiple currency pairs.
Ultimately, which of the two platforms is better depends on the preference of the individual trader. If you are looking for a platform that can offer more symbols and markets, more order types, and partial fills, then Metatrader 5 could potentially be a better match. Users looking for a program that is both easy to understand and configure will greatly appreciate the no-nonsense execution that comes with Metatrader4.
To Sum Up…
Some may argue that MT4 is outdated and a switch to MT5 is inevitable. Others may argue that with nearly two decades of proven experience, MT4 is irreplaceable. But both these viewpoints are shortsighted.
It is vital to understand that both the MT4 and MT5 platforms service a core purpose suited to a specific audience. That is to say, both platforms are ideal for traders who wish to perform advanced technical analysis and deploy custom trading strategies that best fit their personal needs and preferences.
MetaTrader 5 should not necessarily be viewed as an update to the fourth version; instead, it is an entirely new platform with its advantages and qualities.Both platforms have advantages and disadvantages, so knowing which is right for you is important. The choice of a platform boils down to your personal financial goals and experience.
Both platforms are available in the form of desktop software, mobile apps, and even directly through web browsers.
To answer which is better is impossible. The industry continues to evolve, advance, and move forwards, and whatever platform you decide will best suit your needs in your trading journey – here at NAGA, we have everything you may need to get started.