MetaTrader 4 (MT4) and MetaTrader 5 (MT5) are two industry standard trading platforms, developed and maintained by MetaQuotes Software Corporation, a company founded in 2000 and which has played an important pioneering role in the development of platforms dedicated to Forex Trading for the independent home users.
Let’s see who these Forex Trading Platforms are best suited for and what are the advantages of the MT4 and MT5.
The Metatrader suite, is a licensed program that online brokers run on their Forex Platforms and offer it for free to their traders. This is why it’s one of the most used trading platforms in the Forex and CFD markets globally.
With such a large community of users, nowadays, MT4 and MT5 boast extensive documentation of the basic code, and various articles supported by both the developers and the global community of users.
These platforms are therefore ideal solutions for independent and professional traders who want to trade manually, create trading systems, algorithmic trading and as a link interface for social trading and copy trading through Expert Advisors (EAs).
Expert Advisor Definition
A fundamental feature that allowed MetaTrader to become so widespread was the integration of a programming language that allowed programmers to create scripts and systems for automated trading.
This proprietary language called MQL (MQL4 for MT4 and MQL5 for MT5), has favoured the growth of a secondary market formed and supported by programmers who create precisely customized scripts, utilities, robots, indicators and Forex applications of various kinds, better known as Metatrader 4 Expert Advisor (EA), all tools aimed primarily at those who do automatic and algorithmic trading.
In fact, Metatrader continues to be one of the favorite platforms for automatic trading and for investors who create and use these strategies.
MT Versions, Applications and Availability
MetaQuotes launched its MetaTrader brand for the first time in 2002, and the most popular version, the MT4 was launched in 2005. Five years later, they followed this up with the launch of MT5 with the aim of expanding into other asset classes and markets.
Both MT4 and MT5 are today available within the vast majority of online forex brokers. The native desktop version is available for the Windows operating system. MetaTrader desktop is the best and most recommended version for anyone who chooses to use MetaTrader platforms. The MT4 download can be obtained directly from the broker’s website or from MetaQuotes’ official website and can be installed on your computer for free.
In addition metatrader 4 for Mac is also available however, for those who wish to install and run MT4 on Apple computers with a Mac OS they need to use the Wine Software which allows to run Microsoft Operating Systems on Mac computers.
Furthermore, the MT platforms are available as a Forex Trading app for mobile, both for Android and Apple iOS devices. If you don’t like downloading programmes on your computer, they also have a web version of Meta Trader that can be used directly online on your browser without having to download anything to your computer.
It should be noted, however that the MetaTrader web version Trading Software does not support automatic trading and is limited in various functionality and features compared to the downloadable desktop or app version.
MetaTrader was, after all, born as a desktop platform and even though it is now also available in a web version, we do recommend the desktop version since this is the platform for which it was actually designed.
If it’s more practical, we suggest that traders use the online Web version for control and monitoring operations and to use the Desktop version for all real trading operations.
For automatic trading however, the only possible choice is the desktop version of MetaTrader.
MT4 and MT5 Charts and Tools
MetaTrader (both MT4 and MT5) dashboard layout was created in a way that facilitates navigation and makes it very easy for traders to get what or where they need. All the content is divided into seven categories in the upper toolbar, in addition, it offers the graphic tools and the number of indicators available by default, giving traders an easy starting point to perform the basic technical analysis.
In terms of layouts and graphics, customizable graphic templates can control how predefined graphics look; you can also save your graphs in a custom profile to make a backup of the entire workspace, including all trend-lines and graph configurations.
All the scripts and indicators can be found in the sub-folders within the main data folder. The idea of having the specific settings saved within files is to make is easy for you to back up or transfer your settings to other devices or users. This is one of the reasons that makes the Meta platforms so flexible, as these settings can be shared to other devices or users.
Those looking for more advanced indicators and analytical tools and/or automated trading strategies, can purchase or rent them directly from the MQL5 marketplace by accessing them directly from the platform through the menu option under “Tools> Options”.
In terms of Market updates and news, the available flow of information will be different, based on the online broker platform you are using. Each different Broker decides on how many news providers they use to show News Headlines within their platform.
Trading, Social and Copy Trading Signals on MetaTrader
MetaTrader was not specifically created for social trading (eToro is the leader in this aspect), however it does offer many possibilities for social trading and is a good platform for this type of Forex trading.
The signal market available on the MQL5 Community allows traders to copy the strategies of approved signal suppliers simply by purchasing the service. This usually comes in the form of a monthly subscription.
This mode is called social trading or copy trading, and involves expert traders who monetize their strategies by selling them to less experienced traders who then duplicate them automatically on their platform.
Automated Trading through EAs
One of the main reasons for using MetaTrader is the great availability of Expert Advisors available and easily integrated on the platform.
Expert Advisors (EAs) are required within the MT platforms to incorporate the automated trading systems.
Most EAs have a set of customizable parameters that allow users to specify the position size and risk/warning attributes, among other elements. All these elements can be configured before enabling automatic trading.
Users do not need to copy the Expert Advisors trade as is. The trade can be copied and modified before being actioned. Moreover, an EA can be distributed without the possibility of modifying the code. This is the preferred method by traders who want to sell their trading strategies but want to keep the source code hidden.
Back-testing and optimization of Expert Advisors
The ability to test strategies and EAs is one of the most functional features of MetaTrader.
MetaTrader platforms allow users to test precisely how a single EA would operate on historical data through a procedure known as Back-Test, which is a feature found in the Strategy Testing section.
This testing mode is useful when you want to check how an Expert Advisor strategy would perform in a given period of time, giving you the opportunity to see an operational simulation and therefore understand better if it would work and how much it would generate in terms of profit.
Developers can also optimize their strategies on a specific historical dataset, such as the last three months of EUR / USD data, to get more real results.
Optimizing a strategy based on historical data obviously has some advantages, but it should be borne in mind that these results can be misleading, as the future results that will be obtained from the same strategy can be significantly different. As the popular phrase goes, ‘past indicators are not a guarantee of future performance’.
Therefore, testing a strategy in advance on current real market conditions may be even more important than retrospective testing, before you can assess the value of the results.
Use of Cloud computing and Virtual Private Networks for Automated trading
Retrospective tests take place locally on MT4 and this requires that traders run the platform on their own processor or using a dedicated Virtual Private Server (VPS).
Once again, Meta4 and Meta5 prove to be very flexible platforms for advanced automatic strategies, offering a range of possibilities that many other platforms don’t have. The VPS is a solution suitable for professional or advanced traders, as it allows you to have a much more stable and totally configurable trading environment.
Here are some of our recommended online brokers that have VPS combined with MetaTrader.
Pros and cons of using Expert Advisors
The advantages of EAs in automated trading are obvious, however traders must be aware of the pitfalls and know how to analyze an EA before using it to manage their investment capital.
Any automated strategy is only good when it can produce results based on a fair risk compromise, therefore it is good to be aware that, just as there are some really good Expert Advisors, there are also some very bad ones.
The MetaTrader community where you can purchase EAs is very well organized, and there are reviews of the various EAs with comments left by the community that tried them. Look for a reliable EA that has positive comments and opinions and stay away from those that have any negative reviews.
Furthermore, if you feel that you’re not confident enough to evaluate an EA yourself, we advise that you rely on someone more experienced before using it, since the risk can be considerable.
5 Tips to Select a Good Expert Advisor (EA)
- Make sure you fully understand the Expert Advisor strategy
- Consider its costs and any historical results obtained by other traders
- Whenever possible, perform a retrospective test on multiple instruments and time frames, or review historical performance
- Compare and study the results of multiple tests to verify that they are in line with what you are expecting in terms of results
- Test the strategy with small figures before investing large sums
MetaTrader4 vs 5: Differences and Advantages
MT5 is an updated version of this popular trading platform equipped with several additional innovative features.
It must be stated that Meta Trader 4 is still very popular and used by thousands of currency traders, and this is why MetaQuotes continues to update MT4 to satisfy the important user base that uses it for trading on Forex and CFDs. MT5 on the other hand is the newer version of the platform that, in addition to CFDs and currencies, allows you to trade also on stocks and futures, as well as supporting strategies for more complex trading.
MetaTrader 5 is therefore a multi-asset platform compared to MT4, which makes it ideal for traders who operate on stock markets and futures.
The MT5 has a more modern aspect in terms of visual layout and navigation, while maintaining many distinctive elements typical of MT4.
Main Difference of Mt4 vs Mt5
One major difference between MT4 and MT5 is the coding syntax of the EAs. While MT4 EAs are based on MQL4, the MT5 versions are based on MQL5. This means that the two versions are not compatible. Having said this, it must be noted that there are various programs that offer the ability to convert MT4 EAs to run on MT5.
Another fundamental difference is that MT5 uses a cloud network which means that users can perform retrospective tests using the developers’ VPN available within the platform.
With the signals available for social and copytrading, both platforms provide traders with a lot of options, but MT4 continues to be far more available than MT5 at most of the best online forex brokers.
MetaTrader Final Opinions
After several years of development, MetaTrader continues to be a leading platform for Forex Trading Platforms especially with MetaTrader 4. Multi asset platforms are also using more and more the MetaTrader 5 interface.
Among online and retail Forex brokers globally, MT4 and MT5 are a favorite choice, as they are able to provide almost all types of users with the necessary trading tools, as well as the advantage of being able to enjoy all the support from the community and the market place.
The first thing to check when it comes to choosing whether to use MT4 or MT5 is the range of markets available on each platform at the chosen broker, as this can vary from one broker to the other.
To open a live account or a demo account with a MetaTrader broker, look at the list of recommended MT4 brokers (https://www.confrontobroker.it/broker-metatrader-4/) and MT5 brokers (https://www.confrontobroker.it/broker-metatrader-5/), where you will find all the information to choose the most suitable platform for your trading needs.