As the domestic and international foreign exchange markets continue to evolve, an increasing number of forex trading platforms have emerged. However, MT4 (MetaTrader 4) and MT5 (MetaTrader 5) undoubtedly dominate the vast majority of the market.As their names suggest, these two platforms share a deep connection. If you frequently come across news and updates about MT4 and MT5 but still find it difficult to distinguish between them, reading this article will give you a deeper understanding of both platforms.
MT4 and MT5 have been integral to the entire history of forex trading. To better understand their functions, it’s important to look at their origins. In 2004, MetaQuotes Software Corp. developed MT4 to support the company’s forex trading operations,However, even MetaQuotes did not anticipate that, once MT4 hit the market, its extremely comprehensive feature set and groundbreaking capability—allowing investors to write their own code for automated trading—would instantly capture the world’s attention. Most remarkably, in just five short years, MT4 reportedly captured nearly 90 percent of the forex trading software market,
However, as the foreign exchange market continues to evolve, an increasing number of pirated MT4 software programs have flooded the market. To combat piracy and maintain its long-term competitive edge, MetaQuotes developed the MT5 software in 2010. Compared to MT4, MetaQuotes clearly has higher expectations for MT5, MT5 is not limited to the foreign exchange market; financial derivatives such as stocks and options can also be traded on the MT5 platform.
It’s clear that both MT4 and MT5 are software platforms suitable for forex trading, but is the difference between them merely a matter of how widely they’re used in the market? In fact, that’s not the case.
For MetaQuotes, a company whose core competitiveness lies in information technology, the MQL4 programming language used in MT4 has become outdated. Therefore, MT5 utilizes the MQL5 language. At first glance, MT5 —which employs this new programming language— runs nearly 20 times faster than MT4! Consequently, when conducting backtesting, MT5 is significantly faster than MT4. However, this improved programming language also has its drawbacks: if you are currently an experienced MT4 user, your well-developed and mature algorithms cannot be directly ported to MT5. It is precisely for this reason that a large number of investors have opted not to use the MT5 software.
Another key difference between MT4 and MT5 is their order execution modes. MT4 offers only two options: “fill or kill” or “cancel all,” while MT5 provides greater flexibility, allowing orders to be partially filled and partially canceled.There is also another key difference regarding order trading: MT4 supports hedging, while MT5 does not by default. If your trading platform is subject to U.S. regulation, it is best to use MT5 for trading, as hedging is not permitted under U.S. regulatory policies.
As mentioned above, MT5 cannot really be simply viewed as an upgraded version of MT4. Although both MT4 and MT5 support forex trading, many of their core features are completely different.
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