MT5 vs MT4 — A number incrementing in the back of a software name ought to be an update. Right? And the newer version is a look-alike of the previous one too. So the odds of it being an update rises even higher. But MetaQuotes Software Corp, the creators of the awesome Metatraders (MT4 and MT5) had other ideas.
MT4 and MT5 is neither one nor the same. And, to clear out the clouds, MT4 is not an updated version of MT5. It never was supposed to be.
Radical Change: MT5 vs MT4
MT4 hit the markets in 2005, the era of single core processors.
So, the creators had no other option rather than to build it as a single core application. However, the inception (2003) and the evolution (post-2005) of multi-core processing has transcended the potential of hardware and operational systems.
The word speed in ‘processing speed’ was redefined since the inception of multitasking and multithreading. And the present generation computers are a supercomputer compared to the pre-2005 era.
And MetaQuotes was soon to realize it too.
So, they developed a 64-bit application that made multithreading seamless. The architecture and framework were new of a kind. They coined it as MT5 and rolled it out smoothly without disrupting the market and its participants by letting MT4 function alongside MT5. However, the trading fraternity is yet to come out of its comfort zone to unravel its full potential.
What does it mean to you?
However, if you are a millennial who likes to automate your trading, then it must matter a great deal to you.
Expert Advisors (EA) and custom indicators can run seamlessly on a multicore environment (MT5). No lags, no hangs, with full efficiency.
And forex being a 24×5 market, you need your EAs to scan for trades round the clock. MT4 is a wary prospect for round the clock marathon since its single-core crippleness dumps the cache memory. It results in a dismal performance of EAs, sometimes goes awry too.
Whereas MT5 is a perfect candidate for marathons, as processors switch from one to next, keeping the cache afresh. So, you can open a plethora of charts and run as many EAs as per your hardware’s efficiency.
The bottom line is MT5 uses the full efficiency of your hardware, whereas MT4 doesn’t.
Note: Even if you run MT4 on a supercomputer, it will constrain itself to single core.
MQL 4 vs MQL 5
You might be aware by now MT4 was built using MQL4 and MT5 using MQL5. If you are a programming geek who aspires to code your strategies, then continue reading. Else skip this part.
MQL4 is a proprietary language of MetaQuotes Software Corp. So, you’re on your own in learning. It’s a dead end as you can’t apply the same skills elsewhere.
Whereas, MQL5 has its root in OOPS concepts. So, you can break down your project (strategy) into blocks and each block can be coded separately.
The output of one block will be the input to another block. And, the blocks can be reused in other strategies. For instance, a part of your strategy requires you to calculate the difference between high and low of a candle and you have coded the same as a block before. In the future, whenever you need the difference in candle height, you can use the same code.
MQL5 allows you to create dynamic graphics through the Resourcecreate function. It helps you draw complex images and drawings on the charts, say harmonic or ABCD pattern. So, the interface of MT5 is cool and if you’re a geek, you can make it even cooler.
Strategy Tester: MT5 vs MT4
You can see the real difference between MT4 and MT5 in the strategy tester. Since MT5 allows multithreading, it facilitates testing in multiple currencies amid real ticks. Though MT4 permits to test with real ticks, it takes forever, owing to its single-core crippleness.
MT5 is a multiserver application. It has separate servers for each process — access, trade, history and backup. The synergy of the servers amplifies the fetching and processing speed.
On the other hand, MT4 has only one server for all the processes.
So, MT5 renders a better user experience than MT4.
Do you know? You can install MT5 in Linux too.
Target Audience: MT5 vs MT4
MT4 was intended for a niche market – Forex.
However, the trading fraternity took a liking to the product and so when the developers went for a spin-off, they aimed at a broader audience – the stock market.
Hence, MT5 unraveled features, which were privy only to the stock market, once.
Depth of the market
It gives the order flow of the market. The buyers and sellers at each price point are enumerated.
However, forex is not a centralized exchange. So, the brokers can only provide the figures of their client, which could be misleading, most times. Hence, most brokers don’t support it.
Hedging vs. Netting
MT4 supports only hedging.
Whereas MT5 supports both hedging and netting.
You can opt for either of the accounts during account opening with your broker.
Hedging means you can have multiple open positions of the same security. For instance, you can have 1 lot of buy and 1 lot of sell in EUR/USD open at the same time. The positions are treated as separate orders and they don’t cancel out each other.
Netting doesn’t allow to have multiple positions of the same security. It either cancels out or clubs multiple positions to a single one. For instance, you’re holding 1 lot of ‘buy position’ in EUR/USD at 108 and you wish to add one more lot to your position at 107. The new order is clubbed together and you will have a single position of 2 lots ‘buy’ and the entry price is averaged to 107.5. You can also book partial profits, which enables lot sizing and risk management a tad easier.
Versatility in Order: MT5 vs MT4
Apart from the usual order types — buy Limit, sell limit, buy stop and sell stop, MT5 offers ‘buy stop-limit’ and ‘sell stop-limit’ orders.
It comes in handy when you have ‘buy above’ or ‘sell below’ setups.
MT5 also allows partial filling of orders. Say, you have ordered 3 lots of buy EUR/USD, but if only 1 lot is available to fill, MT5 fills it. You have the option to cancel the remaining 2 lots or wait it out. On the contrary, MT4 either fills (completely) or kills.
Technical Analysis: MT5 vs MT4
MT5 would surely pique a technical enthusiast.
It has 21 timeframes. And the 10-minute, 8-hour and 12-hour charts could give new insights to a trader.
Further, MT5 has more number of indicators and analytical objects compared to MT4 — 38 vs. 30 and 44 vs. 31 respectively. So, you have ample room to improvise your technical analysis skills.
MT5 has a built-in economic calendar. It renders instant update in real-time. So you don’t have to juggle between your terminal and browser.
After all, those are the volatile moments of the forex trading and it helps you to be in your tiptoes.
As a final bid, we wish to quote, Anthony Papaevagorou, Head of Sales at MetaQuotes, “We’re a victim of our own success”. It sums up the entire debate of MT5 vs MT4.
Although MT5 is far superior in technology and efficiency, brokers have shown little interest in MT5, thus far. And it is set to end sooner, as MetaQuotes have announced that MT4 is ‘dying out’. So, try out the tech-savvy Metatrader 5 from FRXE and experience its power here.