What is MetaTrader?
Metatrader 5 (MT5) is MetaQuotes electronic platform that targets primarily retail traders and smaller institutional clients. Launched in 2010, it is the predecessor of MetaTrader 4 (MT4), the market leading trading platform. MetaTrader allows investors to send order requests to liquidity providers or banks to speculate on various asset classes. MetaTrader 5 has gradually gained more traction in the market due to its improved capabilities over MetaTrader 4. Moreover, MetaQuotes has recently restricted on issuing new MetaTrader 4 server licenses.
On both platforms, users can access a user-friendly interface from desktop, web and mobile apps. They also support automated trading using robots and trading signals. MetaTrader client comes with a wide range of technical analysis tools, such as indicators and graphical objects. Brokers can easily find more tools for their traders on the MetaQuotes Marketplace. However, here are some key factors that make MetaTrader 5 a preferred choice.
5 reasons traders should use MetaTrader 5
1. MetaTrader 5 is a true multi-asset platform
MetaQuotes built MetaTrader 5 with more than retail forex in mind. As a result, it is better prepared (and suitable) for other asset classes such as stocks, equities and exchange-traded commodities. MetaTrader 4 can only deal with over-the-counter (OTC) products (e.g. forex) and other asset classes come in the form of contract for differences (CFDs). Brokers create CFD trading instrument for which they are the counterparty acting as the market maker.
In contrast, MetaTrader 5 can trade these assets over an exchange with no broker as an intermediary. It can hence help remove the conflict of interest from the broker and could lead to, in many cases, a fairer execution.
2. Historical data
When doing technical analysis either manually or using tools, a trader needs to have as exact data as possible. In MetaTrader 4, there is no way to retrieve tick data from the server and therefore one has to depend on chart data or import tick data from an external source.
In MetaTrader 5, one can easily download accurate tick data directly from the broker’s server without looking for it from somewhere else. MetaTrader 5 also provides a greatly improved chart data storage support in the server, including more granular minute charts. All together makes MetaTrader 5 ideal for traders using technical analysis as support for their investment decisions and trading algorithms.
3. Charts & execution types
In MetaTrader 4 platform, clients can review previous price patterns from 9 different charts and use them in their algorithmic trading. However, the limitation on storage of price bars in MetaTrader 4 became a hurdle for algorithms for frequent traders. When aggregating the one-minute (M1) data quickly into an average M5 or M15 chart, trading algorithms cannot make precise technical analytics of patterns.
In MetaTrader 5 however, the number of charts has grown from 9 to an impressive 21. Also, the amount of bars that can be stored on the MetaTrader 5 server has increased significantly. With these, the clients can now download high-quality and ready-to-use trading data on their first log-in.
Furthermore, MetaTrader 5 has introduced two additional pending order types: buy stop limit and sell stop limit. Traders can now place an order as a classic stop limit order and when the price reaches the stop-level indicated, a buy or sell limit order is triggered.
4. Native support for market depth
One of the key features missing in MetaTrader 4 is the market depth function. By having access to market depth data in MetaTrader 5 platform, clients can get a better idea on the market activity, hence better predict what their execution price will be based on the trade size for that symbol. Clients can also better evaluate the transparency on pricing from the broker. Of course, this requires that the broker has price stream with enabled market depth.
5. It is much faster to process orders with MetaTrader 5
MetaTrader 5 is built on a 64-bit architecture and is multithreaded. This enables it to work better with parallel tasks for all users and also speeds up back-testing trading algorithms.
MetaTrader 4 is built on a 32-bit architecture and is single threaded, therefore it has a cap on how much memory can be used. This limits the capabilities for extensive simulations required prior to putting the strategy in play on a live account.
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For a more comprehensive comparison between MetaTrader 5 and MetaTrader 4, click here. If you want to learn more about how to boost your brokerage with MetaTrader 5 and how BrokerTools can help you with that, contact us and we’ll help you out!