Online trading is booming in South Africa. Even before the pandemic, the country was already a leader in terms of Forex volumes. The economic crisis has accentuated the value of online tools. Millions of people are using MetaTrader terminals worldwide, and local residents have also adopted the systems. But how do these compare?
What Is MetaTrader?
Online traders need software to work in real markets. Through a dedicated terminal, they connect to the global foreign exchange, stock exchange, and derivative systems. Each platform is a fully-fledged digital environment where trading takes place. It assists users at each step, from chart analysis to execution to profit collection.
Both platforms were created by MetaQuotes Software, and they were released 5 years apart (MT4 in 2005 and MT5 in 2010). Impressively, both are still incredibly popular with beginners and pros. These Forex trading systems share basic features including:
- a broad assortment of trading instruments;
- various visual aids (tables, bar charts, etc);
- high speed of execution;
- live-streaming quotes;
- comprehensive compatibility;
- access to financial news;
- audio alerts.
Both systems are equipped with risk management tools: Stop Loss and Take Profit. Users access different financial instruments to diversify exposure. In MT4, the range is more narrow: currencies, commodities, CFDs, and indices. MT5 adds stocks and futures to the mix.
Facilitation of Analysis
Traders may use two analytical methods: technical and fundamental. The first methodology considers price charts with adjustable timeframes. Users rely on recurring patterns to identify the most lucrative entry and exit points.
Fundamentals are factors like interest rates, GDP changes, oil prices, etc. These are the drivers of currency rates worldwide. Such changes may be deduced from the media and economic calendars — special tools summarizing the most consequential announcements.
MT4 features a financial news line that keeps users in the loop. MT5 also includes an economic calendar. It is better geared towards both schools of thought, although the predecessor is used by many fundamental traders. Trusted global brokers like Forextime recommend both editions.
Both MetaTrader systems come in three forms. The range suits the needs of any modern trader. First, users may install desktop software on laptops and PCs (Mac and Windows). Secondly, they may access the web trader directly from browsers. Thirdly, there is an app for any popular mobile OS (Android and iOS are supported). As a result, traders may switch between devices during the day.
All systems are connected to the same cloud-based servers. This means data is shared instantly. The same position may be opened from one device, modified from another and finalized from a third one. This makes MT4 and MT5 notably agile.
MetaTrader Demo Mode
Both environments may be used as trading simulators. A demo account unlocks them in a test mode that mimics real market conditions. Users may explore all the features and trade with a virtual deposit. Demo trading is an essential part of learning. It is offered by reliable brokers that care about their clients.
Advanced Features of MT5
Aside from the economic calendar, the latest version has other notable extras. First, you will notice richer graphics analytics. Tools for technical analysis are more varied to facilitate more strategies. The biggest differences include the following:
- 21 timeframes (against 9 in MT4);
- 38 embedded technical indicators (against 30 in MT4);
- 44 graphic objects (against 31 in MT4);
- ‘exchange execution’ (unavailable in MT4);
- 6 types of pending orders (against 4 in MT4);
- Depth of market (unavailable in MT4);
- Netting (unavailable in MT4).
Different Programming Languages
The two generations of MetaTrader are based on different languages. The first one — MQL4 — is less sophisticated. It is classified as position-based. One operation requires several functions. In comparison, MQL5 relies on orders, and a request is fulfilled through a single function. Users may also integrate and modify scripts.
Which Should You Choose?
Usually, newer versions of the software are more sophisticated than predecessors. MetaTrader is no exception. Yet, supposing MT5 is best for everyone is wrong. As the fourth edition is more basic, it is perfect for beginners and those who focus on currencies. These user categories do not need features for more complex instruments.
MT5 supports a wider range of assets, including stocks and futures. It is favored by holders of diverse portfolios. These are experienced users who want to spread risks across a wider market spectrum. Meanwhile, rookies use MT4 to explore trends and indicators and build crucial habits like setting Stop Loss.
The bottom line is: choose what is most convenient. If you find MT5 overly complex, trade through the fourth version. Gradually, you will become more adept at using all the charts and tools. Eventually, as your portfolio starts growing, you can switch to MT5.