Although it is very common for many novice and not-so-novice traders, investors or users to think that MetaTrader 5 is a new version of MetaTrader 4, the reality is that it is not. Metatrader 5 was designed to trade new markets, in addition to those available in Metatrader 4, such as Indices, Commodities, Futures and Options.
Seeing this confusion I have decided to create this article where we are going to talk about both platforms making a comparison between them. we start.
1. Differences between MetaTrader 4 and MetaTrader 5.
Although there are many differences between the two trading platforms, we are going to go to the most important ones on a practical level to help you better understand what they are and at the same time you can develop your own evaluation criteria for these platforms, which will allow you to know which one suits you best. better to your trading.
1.1. Available markets.
The main difference. Metatrader 4 was created to trade on a decentralized market and scarcely regulated as is the foreign exchange market or Forex and in general, CFDs. On the other hand, Metatrader 5, in addition to operating Forex and CFDs, was designed to operate centralized markets such as Stocks, Bonds, Futures, Commodities, Indices and Options.
1.2. Depth of Market (DOM).
The Depth of Market (DOM) is an electronic book or record, in real time, of all the purchase and sale orders pending execution (queued) on an exchange or trading platform. It can be useful to you as a trader if you want to see where the largest volume of the asset you are going to trade is concentrated. In my case, I don’t use it.
This tool is available in Metatrader 5 but not in Metatrader 4.
1.3. The No Coverage rule.
I am going to explain what happened before with Metatrader 5 and one of the reasons why it was not well received at the beginning. This has now changed as I will explain below.
In Metatrader 4 you work with a hedging system where each operation is recorded individually. This means that the trader can close any of his open positions, regardless of which order or position was opened first. Also, we can have different positions open in the same asseteven though they point in opposite directions. You can open a buy order on the USDJPY pair, for example, and then open a sell order on the same pair without canceling each other out.
On the other hand, Metatrader 5 complied with the “No Coverage” rule of the NFA (National Futures Association), this rule also known as FIFO (First in, First out. First in, first out).
I explain it better. When we trade with a “No Coverage” system, there can only be one open position in the same symbol or financial instrument, that is:
- If we have an open position in an instrument and we make another trade in the same direction, the new position size is added to the existing position.
- If we open a position on a financial asset and then make another trade in the opposite direction, the size of this new position is subtracted from the existing position. If it is equal to that of the existing position, then the position is closed. Conversely, if the volume of the opposite position is greater than the volume of the existing position, a position is opened in the opposite direction of the existing one.
The FIFO rule is a US regulation requirement for US Forex traders, so the Metatrader 5 platform is tailored for US traders.
When you do discretionary (manual) trading with an unhedged account it can affect your trading, but if you do algorithmic trading the FIFO no-hedge rule can influence even more.
An example to understand. Imagine that we have designed two Forex strategies or systems that trade on the same currency pair. The trading strategy of each robot is different. One of them opens a buy trade and about 5 minutes later the other system opens a sell trade.
Do you know what is going to happen? Well, the orders will cancel each other because there is no coverage.
Over time, to expand the Forex market options, Metatrader 5 was making some changes and A second registration system with Hedge is now available to traders. When you open one you can opt for a compensation system (not coverage) or a coverage system.
1.4. How orders are executed (Execution Policy).
The order fulfillment policy in Metatrader 4 is Fill or Kill (all or nothing). This means that when you place an order, runs with the specified size. If, on the contrary, the necessary volume (liquidity) does not exist in the market to execute the order in its entirety, it is cancelled.
In Metatrader 5 we have a broader execution policy, which includes the following options:
- Fill or Kill (All or Nothing).
- Immediate or Cancel.
When we execute an order with these conditions, we agree that the order will be executed with the maximum volume available in the market. If the order cannot be completely filled, the remainder of the uncovered volume will be cancelled.
In this case, unlike the previous one, the uncovered volume is not cancelled, but remains active to be completed.
1.5. Types of pending orders.
In Metatrader 4 we have 4 types of pending orders: Buy Limit, Sell Limit, Buy Stop and Sell Stop in addition to Stop Loss.
In Metatrader 5, in addition to the 4 existing order types in MT4, there are two additional order types: Buy Stop Limit (buy stop + buy limit) and Sell Stop Limit (sell stop + sell limit).
1.6. Strategy programming languages.
Metatrader 4 uses the programming language MQL4 (MetaQuote Language 4) to create robots, indicators, scripts and function libraries for said platform. While Metatrader 5 uses the programming language MQL5 (MetaQuote Language 5).
It is important to note that MQL4 and MQL5 are not compatible, therefore programs written in MQL4 for Metatrader 4 cannot run on Metatrader 5.
1.7. Strategy tester.
If we want to test trading strategies, MT5 with its MQL5 language is much faster than MT4. Also, in MT5 we can test trading strategies using real-time data.
In addition, the backtests provided by MT5 give more complete information about your trading strategies than in the case of MT4 (a very good point in favor).
1.8. Supported operating systems.
As for the supported operating systems, these platforms do not present any difference. Metatrader 4 and Metatrader 5 can be installed on:
- PC: Windows, Mac OS and Linux.
- Mobile and tablets: Android and iPhone/iPad.
1.9. Other aspects.
In this category I am going to mention some aspects that, although they have their differences, from my perspective they are not really that important.
Let’s start with the graphic design of the platforms, from this perspective, both MT4 and MT5 are very similar and the small differences are practically imperceptible.
Regarding technical indicators, in Metatrader 4 we have 30 indicators available while in Metatrader 5 we have 38 indicators available.
Metatrader 4 puts at our disposal 31 graphic analysis tools to draw trend lines or support and resistance levels, while in Metatrader 5 we have 44 different graphic tools.
The time frames available on both platforms are different, in Metatrader 4 there are 9 time frames available and in Metatrader 5 there are 21 different time frames.
Unlike Metatrader 4, in Metatrader 5 we have a economic calendar integrated into the platform.
Another point to highlight is the technical support offered by Metatrader 5 compared to Metatrader 4, which does not offer such a service. This lack of technical support in MT4 is compensated by the great community that exists around this platform to solve all your doubts. In both platforms we can communicate by email, the only difference is that in MT5 we can attach files and in MT4 we can’t.
2. Comparative table of MetaTrader 4 Vs MetaTrader 5.
Next, I show you a comparative table with a summary of everything that I have explained to you in the article:
| Characteristic | MetaTrader 4 | MetaTrader 5 |
| Release year | 2005 | 2010 |
| Availability in brokers | Very high | Short |
| available markets | Forex, CFDs | Forex, CFDs, Futures, Stocks, Options |
| Coverage | Yes | Yes |
| Order Execution Policy | Fill or Kill | Fill or Kill Immediate or Cancel Return |
| Partial execution of orders | Nope | Yes |
| Types of pending orders | 4 | 6 |
| Market Depth | Nope | Yes |
| Technical Indicators | 30 | 38 |
| Graphic analysis tools | 31 | 44 |
| Temporary frames | 9 | twenty-one |
| Economic Calendar | Nope | Yes |
| Programming language | MQL4 | MQL5 |
| strategy tester | single thread | MultithreadMulticurrencyReal Ticks |
| Technical support | Nope | Yes |
3. Conclusion.
The first thing I think you should keep in mind is that Metatrader 4 is geared towards decentralized Forex and CFD markets. For its part, the Metatrader 5 platform, in addition to decentralized markets, also covers centralized markets such as: stocks, futures, etc.
Another very important difference that we should not forget, especially if we do algorithmic trading, is that MT4 was developed in the MQL4 language and MT5 was developed in MQL5, these two programming languages being incompatible with each other.
Metatrader 5’s “no hedging” rule makes it the ideal platform for traders based in the United States.
It is not about deciding which platform is better than the other because in reality each of them is aimed at different groups of traders. Although the number of users or investors who use MT4 is much higher than the number of MT5 users, this does not mean that MT4 is better than MT5. This is easy to understand if we take into account that most of the big brokers offer their services through MT4 instead of MT5.
Lastly, if you are just starting out in trading I would recommend starting with MetaTrader 4, which is the most user-friendly and well-known platform among most brokers. Once you’re comfortable with it, try trying out Metatrader 5 so you can choose which one best suits your goals and trading style.
Any questions, I’ll read you in comments.