Difference between XM MT4 and MT5

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Different between MetaTrader 4 and MetaTrader 5

In the world of online trading, MetaQuotes Software Corp. has carved a niche for itself as a developer of top-tier trading platforms. Starting with their initial foray into trading platform development in 2000 and 2001, the company’s products, though functional, did not quite hit the mark due to limited features and capabilities. However, this changed with the release of MetaTrader 3 in 2002, offering expanded programming language capabilities and functions. Fast forward to 2005, and the company launched MetaTrader 4 (MT4), a trading platform that quickly rose to popularity. Five years later, the advanced MetaTrader 5 (MT5) platform was introduced. This article delves deep into the features, advantages, and comparison of the MT4 and MT5 platforms.

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The Emergence and Success of MetaTrader 4

MT4 was developed in 2005 as a user-friendly and multi-functional platform, initially designed for forex retail trading. Its popularity among traders skyrocketed due to its intuitive interface that was not overloaded with excessive information, panels, or buttons. In fact, some functions are even duplicated in the menu on the toolbar and the menu invoked by the right mouse button for the trader’s convenience.

MT4’s flexibility allows it to support trading for a wide array of financial instruments beyond just currencies. These include Contract for Differences (CFDs) on indexes, shares, bonds, commodities, and even cryptocurrencies. The platform is also mono-threaded, designed for 32-bit operating systems but can also operate on 64-bit systems, albeit with potential compatibility issues. It supports over 30 languages, making it accessible for traders worldwide.

One major reason for MT4’s popularity is the continuous marketing and technical support offered by MetaQuotes. The company’s team of software developers consistently works on upgrading and improving the platform’s code. Furthermore, the licensing fee for brokers is affordable, contributing to the platform’s widespread adoption.

MT4 offers three modes of order execution, a variety of order types including a trailing stop, thirty built-in technical indicators, and nine timeframes. It also offers a programming platform – MQL4 – which allows traders to add custom tools like scripts, Expert Advisors, and indicators to customize their trading experience. Additionally, MT4 includes a unique ‘tester’ feature, which enables traders to test manual and automated trading strategies on historical data. Traders can record these backtesting results and analyze statistics, making MT4 one of the few platforms to offer such a feature.

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MetaTrader 5: A New Era of Trading Platforms

With MT5, launched in 2010, MetaQuotes aimed to redefine the trading landscape. Intended to replace MT4 completely, the company even decided to stop supporting MT4 and halt the sale of licenses to promote the new platform. However, despite numerous upgrades, MT5 did not attain the anticipated level of popularity, prompting MetaQuotes to continue supporting both versions.

Compared to its predecessor, MT5 is a multi-asset class trading platform with enhanced technical analysis options, tester, and order execution options. For example, it offers the Depth of Market (DOM) data, a tool rarely used in MT4. In MT5, however, DOM has been reimagined as a substantial trading tool, offering clear volumes in stock trading. Additionally, developers have integrated a netting system into MT5 to display a single order representing the average value of all open positions for one asset. This feature helps to streamline the tracking of multiple transactions.

Another advantage of MT5 is the addition of a multi-currency function to the tester, along with expanded backtesting statistics. This makes the results of tests and optimization of an Expert Advisor or indicator more accurate. MT5 also includes non-standard timeframes, more built-in technical indicators, and two extra pending orders, Buy Stop Limit and Sell Stop Limit, enhancing its technical analysis capabilities.

Designed with 64-bit operating systems in mind, MT5 is faster and more flexible than its predecessor. The platform is multi-threaded, allowing for processes that would take minutes on MT4 to be completed in mere seconds on MT5. Moreover, MT5 expands the horizon of trading options, allowing traders to delve into futures, options, and other derivatives, in addition to Forex trading.

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MT4 vs MT5: A Comprehensive Comparison

Choosing between MT4 and MT5 largely hinges on individual trader requirements. MT4’s user-friendly design, range of features, tools, and robust community support make it an excellent choice for Forex trading, particularly for novice traders. However, MT5, with its technical advancements, caters to a broader market by supporting the trading of various assets and offering faster operations.

Despite these enhancements, MT5 hasn’t quite lived up to the developers’ expectations of completely replacing MT4. Traders familiar with MT4 have been reluctant to rewrite their MQL4-based indicators and Expert Advisors into MQL5, slowing the transition to the new platform. Therefore, while MT5 presents an advanced and diverse platform, MT4 continues to be a reliable and popular choice among Forex traders.

Ultimately, the choice boils down to individual needs and personal preference. Novice traders might also consider starting with simpler platforms like XM, which offers a straightforward, intuitive interface and an opportunity to start trading on a demo account without registration. Regardless of the choice, both MetaTrader platforms offer robust features and tools that cater to a wide range of trading needs.

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Comparison of each feature of MT4 and MT5

For novice traders, MT4 might be a better option due to its simplicity and straightforwardness. However, MT5 offers more features, providing an edge for professional traders seeking more complex functionalities. It’s essential to carefully consider the unique needs of your trading before deciding between MT4 and MT5.

Interface

The interfaces of MT4 and MT5 are nearly identical, with the developers of MT5 focusing on upgrading the functions rather than revamping the interface. There are minor changes in the main menu, but commonly used features, such as “Market watch” or “Navigator” windows, remain the same. Notable additions to MT5 include a more comprehensive “Chart” menu, the “Depth of Market” feature in the view menu, and larger toolbar icons.

Timeframes

MT5 supports 21 timeframes, compared to 9 in MT4. While this increased number of timeframes might be advantageous to certain traders, it might not provide much benefit for day traders who primarily use traditional timeframes.

Order Execution Policy

While MT4 offers three types of order execution – instant, request, and market – MT5 provides more flexibility with additional options like Fill or Kill, Immediate or Cancel, and Return. However, this increase in complexity might not be appealing to beginner traders who prefer simplicity and speed.

Hedging/Netting

MT4 allows for as many orders as needed on a single chart, a system known as hedging. MT5 initially used a netting system, merging multiple positions into a single order. However, due to criticism, MetaQuotes introduced a hedging mode in MT5 in 2016, providing users the option to choose between the two.

Pending Orders

MT4 has four types of pending orders: Buy/Sell Stop and Buy/Sell Limit, while MT5 offers two additional types – Buy Stop Limit and Sell Stop Limit. While this addition in MT5 can benefit professional traders, beginners can manage effectively with the types of orders offered in MT4.

Mobility

Both platforms offer mobile versions for Android and iPhone/iPad, and they perform the same basic functions as the desktop version. Despite MT5’s variety of analytical tools, MT4 has a more extensive custom indicator support, which is a considerable advantage.

Algorithmic Trading

The algorithmic trading capabilities of MT5 have not seen significant changes from MT4, apart from the addition of a couple of tabs for scripts and Experts. The major improvement in MT5 is the significantly advanced strategy tester, which greatly outperforms the one in MT4 in speed, optimization, multi-currency pair backtesting, and testing methods.

Web and Compatibility

Both platforms offer desktop, mobile, and web versions. While the web versions are convenient for quick deals, they lack full functionality and cannot accommodate advisors and indicators.

Copy Trading

Both MT4 and MT5 offer the same model for copy trading. Traders can connect to the MetaQuotes community for copy trading in both platforms. However, there are fees for this service, and the ranking system for signal providers lacks clarity.

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FAQs about MT4 and MT5

Is it possible to use an MT4 account on MT5?

Unfortunately, no. The accounts for MetaTrader 4 and MetaTrader 5 operate on separate servers. However, you can open individual accounts for MT4 and MT5 and deposit funds into both. There is an option for internal transfer between accounts which is instant, free, and unlimited.

How do I transition from MT5 to MT4?

If you want to switch from the MT5 account to the MT4 account with a different broker, you can do so by withdrawing money from the MT5 account and depositing it into an MT4 account with another broker. However, if you’re sticking with the same broker, you can simply open an MT4 account and make an internal transfer.

Will MT4 be discontinued?

Despite initial intentions to phase out MT4 in favor of MT5, MT4 will not be discontinued. Owing to its popularity among traders, MetaQuotes, the developer of both platforms, has decided to continue supporting both platforms.

What distinguishes MetaTrader 4 from MetaTrader 5?

Key differences include the number of built-in indicators, timeframes, an upgraded strategy tester, a netting order accounting model, the inclusion of an economic calendar in MT5, and additional types of pending orders and non-Forex instruments in MT5.

Can MQL4 work with MetaTrader 5?

No, MQL4, the programming language for MT4, is not compatible with MT5. However, you can hire a professional programmer to translate scripts from MQL4 into MQL5.

Why do brokers prefer MT4 over MT5?

This is due to financial considerations, technical complications associated with MT5, and the fact that MT4 is more popular among traders.

How can I convert an MT4 indicator to MT5?

The conversion can be done by hiring someone from the MQL5.com website or freelance platforms who can rewrite the indicator source code into MQL5. Alternatively, if you understand the differences between MQL4 and MQL5, you can try rewriting the code yourself.

Is MetaTrader 4 or 5 better for beginners?

This largely depends on your goals. Both platforms have similarities and are suitable for beginners, but MT4 might be preferable for those looking to master trading strategies or automated trading due to the abundance of resources available. MT5 is an all-in-one solution for those interested in trading Forex, Stocks and Futures.

MetaTrader 4 or QUIK: Which is better?

Both platforms cater to different markets. MT4 is mainly for trading CFDs on currencies, stocks, or commodities while QUIK is for trading on stock exchange markets. For beginners, MT4 may be more user-friendly and flexible.

MetaTrader 5 or QUIK: Which is better?

QUIK is primarily for professional trading in stocks and derivatives. MT5, on the other hand, is versatile and provides access to foreign exchange, stock, and derivatives markets. Thus, the choice between the two depends on your trading preferences and requirements.