Understanding The Difference Between MT4 and MT5

The MetaTrader 4 and 5 are popular trading platforms provided by brokers around the world. MetaTrader 4 (MT4) is the most popular and was launched on July 1, 2005. The MetaTrader 5 (MT5) was released on June 1, 2010, and it came with more features than the MT4. Both platforms provide trading tools for their traders. Also, traders can gain access to the markets through these platforms. Although both platforms enable trading in the markets, they have differences.

The Difference Between MT4 and MT5

Timeframes

One important difference between MT4 and MT5 is the timeframes available. Timeframes are time intervals that provide information about price movement within that time interval. For example, a 4-hour timeframe shows how the price moved (up or down) within those 4 hours.

The MT4 has 9 timeframes. These are;
1, 5, 15, and 30-minute timeframes.
1 and 4-hour timeframes.
Daily
Weekly
Monthly timeframes

The MT5 has 21 timeframes. These include the timeframes mentioned above and additional timeframes mentioned below;
2, 3, 4, 6, 10, 12, and 20 minute timeframes
2, 3, 6, 8, and 12-hour timeframes

Financial Assets Traded

Another key difference is the available trading instruments. The MT4 supports the trading of currencies and contracts for difference (CFDs). On the other hand, MT5 has been designed to support the trading of more financial assets. Apart from currencies and CFDs, MT5 also supports stocks, bonds, options, commodities, and futures.

Pending Orders

A pending order is an order to purchase or sell an asset at a certain price in the future. When you’re seeking to make a trade, in the order box you will find different types of pending orders. The MT4 has 4 types of pending orders. They are; Buy Stop, Sell Stop, Buy Limit, and Sell Limit, The MT5 has 6 pending orders. They are; Buy Limit, Sell Limit, Buy Stop, Sell Stop, Buy Stop Limit, and Sell Stop Limit.

Economic Calendar

An economic calendar is a schedule containing dates of important news events or releases that may affect the movement of currency exchange rates. The MT5 has an economic calendar section located in the toolbox at the bottom of the platform while the MT4 lacks an economic calendar.

Technical Indicators and Graphical Objects

Another important difference between MT4 and MT5 is the available indicators and graphical objects. Technical indicators and graphical objects are trading tools used by traders on both platforms. The MT4 has 30 indicators while the MT5 has 38. Examples are; Moving averages and Bollinger bands. The MT4 has 31 graphical objects while the MT5 has 44. Examples are; Trendlines, Elliot waves, and Fibonacci tools.

Transfer of funds between accounts

The MT5 enables the transfer of funds from one trading account to another while the MT4 lacks this feature.

Programming Languages

A further difference between MT4 and MT5 is the programming language. Metaquotes Language 5 (MQL5) and Metaquotes Language 4 (MQL4) are programming languages that are used to develop trading robots, expert advisers, technical indicators, scripts, and function libraries. The MT4 platform uses MQL4 while the MT5 platform uses MQL5. MQL5 is considered to be easier to use compared to MQL4 whose trading operations require multiple functions to be completed. Also, MQL5 is not compatible with MT4 programmes.

Hedging and Netting System

Another major difference between MT4 and MT5 can be seen in the hedging and netting systems. MT5 allows both hedging and netting while MT4 allows hedging only.

A hedging system allows traders to have multiple open positions for the same asset. When you open a new position, the other existing positions do not change and remain separate. For example; You have 2 existing buy positions of EUR/USD with 1 lot each. Opening a new EUR/USD position of 1 lot (buy or sell) results in you having 3 separate positions of the same asset. A netting system allows a trader to have only one open position for an asset at a time. If you open two positions going in the same direction, those two combine to become one position.

A new position going in the opposite direction can decrease the volume of the existing position. If a new position is executed in the opposite direction, the existing position can be closed when its volume is equal to the new position’s volume. For example; 2 EUR/USD buy positions of 1 lot each when executed becomes one common position of 2 lots.

Conclusion

Some brokers offer both the MetaTrader 4 and 5. The selection of the platform to use depends on the traders’ preference.

To learn more about MT4 and MT5, check out our education articles.