Despite the logical sequence of names, MetaTrader 5 is not the successor to MetaTrader 4 .These are two completely separate platforms that are being developed in parallel by MetaQuotes Software Corp. It is your decision to choose one of them for your business and that is what we will discuss here.
“Do I keep MetaTrader 4 or should I switch to MetaTrader 5?”
In this article we will answer exactly that question. In fact, I’ll give a little extra.
Being an ultra fan of algorithmic trading, I will also answer the same question from the point of view of economic analysis and 4 vs 5 rated marketing guides in general.
Fasten your seatbelts, ladies and gentlemen. This is about to begin.
MT4 vs MT5
To begin, I will summarize how this article is structured and what you should expect from it.
First, in part A, we will talk about the key differences between MT4 and MT5. And I’ll talk about the ones that really matter, not those that are already hackneyed, those that are of the “MT5 has more buttons” type.
In Part B, I’ll give you something you won’t get anywhere. A detailed analysis, year by year, of how MT4 and MT5 have been developing in the last decade.
Finally, in the third section we will make a conclusion. With what we discuss in the first two parts, the answer will be extremely obvious.
Let’s get started.
PART A. Key differences (those that matter)
Often when you read about MT4 vs MT5 you will see a table comparing the two. We won’t waste our time on that.
It is true that there are small differences, such as: “MT5 has an integrated calendar and MT4 does not”, “MT5 supports time periods between 2 minutes and 8 hours”, and so on. But does all this really matter to you?
You can rebuild virtually any time period on MT4, using the period converter script, and if you need an economic calendar, ForexFactory will work just fine.
These factors and many others like them are insignificant. You can either work past them, or if traders really like some MT5 feature, MetaQuotes will sooner or later implement it on MT4 as well, just like MT4 for iPhone.
Realistically, there are only three main differences between the two platforms that matter. These are:
- Additional markets on the MT5.
- The no coverage rule.
- MQL4 vs MQL5.
Let’s go over each one of them.
ITEM # 1: additional markets
MetaQuotes has already dominated the Forex market with its revolutionary MT4 platform, so why MT5?
Is it really an altruistic move to give traders even more features, more indicators, more time frames, and a better (see below) programming language? It doesn’t seem like the whole story is told there, does it?
If there is a higher reason, what would it be?
One word: greed.
The real reason (I should probably say the main one, but I’ll stick with real) why MetaQuotes developed MT5 is because they wanted access to markets that they couldn’t reach with the old MT4.
You see, MetaTrader 4 is fantastic for the decentralized, open, and highly unregulated currency market on a global scale. However, it does not check every box as a platform for other markets.
It’s just not designed that way: connect directly to stock exchanges, like the ones shown above, so the platform needs to integrate with portals for the aforementioned exchanges (that’s the way you can get quotes and market news and perform operations). Plus, there are a ton of other trifles.
Really? Is this revenue stream, associated with the above markets, substantial enough to justify a new platform?
While markets such as the Warsaw Stock Exchange and the ASX (Australian Stock Exchange) represent good returns, they are not the main goal of MetaQuotes. The grand prize is the United States Equality Market, also known as the Stock Markets with a value capacity of three trillion dollars:
Here’s a quote from MetaQuotes CEO Renat Fatkhullin which might give you a better perspective on his intentions with MetaTrader 5:
From the beginning we have been developing the trading system (MT5) without hedging. It is a requirement if you want to distribute a platform for equity markets.
We’ll talk about the no-coverage rule in the next section. But, what is more interesting is that a few months before the launch of MT5, the NFA applied the no-hedge rule to currency trading as well, making MT4 basically useless in the United States.
Tremendous luck for Renat! Why? Well now forex traders will no longer be able to use MT4 and will be forced to buy MT5. Surely, if MetaQuotes can conquer the US markets, then the whole world will follow suit.
Outcome? Global domination, total control! All markets: Currencies , stocks, futures , options and the list can go on, they would fall under the umbrella of the MT5. MetaQuotes would double, triple your revenue over the course of a couple of years and even have its own Public Sale Offer.
An ingenious plan, don’t you think?
Except for one small detail: negotiators don’t like being told what they can and cannot do. Which brings us to the next section.
ITEM # 2: The ‘NO coverage’ rule explained
Note: Read this short excerpt first if you are not familiar with the “No Coverage” rule. Otherwise, feel free to skip to the “what does the new rule mean for traders?” Below.
What is this no coverage rule?
The NFA is an organization in the United States that safeguards the integrity of foreign exchange, futures, swaps, etc. markets.
The no-hedging rule is NFA Article 2-43B : Transaction Compensation which says:
“Members of foreign exchange businesses may not have clearing positions in a client account, but must direct them to a position of: first in, first out. Upon client’s request, an MTDE (Foreign Currency Business Member) will be able to clear transactions of the same size even if there are old transactions of a different size, against the oldest transaction of that same size. “
This rule is also sometimes called FIFO (First in, First out) and was adopted in May 2009. Before this, you could insure your transactions when trading Forex in the United States.
To illustrate this quickly, imagine that on three consecutive days (Monday to Wednesday) you made the following three transactions in Euros and Dollars: buy 1 lot, sell 3 lots . The following table shows how these transactions would be represented on MT4 and MT5:
It can be seen that in MetaTrader 4 the orders are held separately, while in MetaTrader 5 they are placed together.
This is what is meant when MT4 is said to be hedged while MT5 is not.
What does the new rule mean for traders?
Personally, I don’t know why the NFA / CFTC would be so concerned about hedging. The whole world uses it and they agree with it. Why deprive American citizens of this option in your foreign exchange business?
What does the coverage mean to me? Generally speaking, in manual business: take it or leave it, nothing important. However, when it comes to Algorithmic Business, the FIFO rule is a big concern. Let me explain why.
Imagine that you have two Expert Advisors ( Forex Robots ) trading on your account with the same financial instrument, for example, EUR / USD. Completely independent in design, business style, strategy and time period. Basically, every system is unique in every possible way.
The only thing they have in common is that you tossed them together in the same currency pair. But, the trick is that they don’t know.
At some point, one of them opens a buy order. So, 10 minutes later, the other decides to open a sell order. BAM! Orders cancel themselves. Why? Surprise, surprise. No coverage!
But, this does not help EAs, it just confuses them. The most advanced robots monitor your orders: tracking StopLosses, adjust TakeProfits, and close the order when the time is right. But here there is no order to monitor!
How will your EA react? Answer: unknown reaction. They could ignore it and continue with their work or… They could go crazy and start reopening the “lost” orders.
This could cost you extra margin, commission, but more importantly, it will ruin all your business strategies. It is very likely that you could lose a good amount of funds for a simple detail like this.
There are two ways out of this situation for algorithm traders:
- Think about all of this when designing your business strategy, or
- Avoid simultaneously launching EAs that could potentially create hedging.
This complicates the strategy creation process too much and, in fact, makes some strategies simply impossible to implement. The result is a restriction on your portfolio and therefore limits the income potential of your business.
I know that many of my readers are from the United States. To you guys, I wanted to say that from this perspective I totally understand why you don’t like the FIFO rule . Stinks!
I don’t see the FIFO rule giving any kind of profit to the trader. What are you “guarding” it from? It only limits your ability to create independent strategies.
Really folks, if any of you know how the FIFO rule can be “good” for the trader, please write in the comment section below. I would be very interested to read your opinions. Maybe I’m missing something …
How MetaQuptes shot themselves in the foot
Okay, FIFO happened, nothing can be done about it. The NFA is the NFA and you must play by the new rules. I can accept that.
The only thing I don’t understand is why would I encode the NFA rules into a piece of software with a global user base? Through this move, MetaQuotes has made MT5 strictly a product for the United States, alienating a large portion of its user base.
The UK, Australia, Europe, and much of the rest of the world don’t mind the no-hedging rule. So why are traders in these countries still considering switching to MT5 if it enforces US regulations on them, when they don’t have to obey them?
Furthermore, a good number of North American investors have moved their funds abroad to continue trading hedges. This is difficult because most stockbrokers around the world no longer accept US citizens as clients. However, I think there should be other ways because there are people doing it.
Even stockbrokers in the United States have special overseas divisions to offer their services to non-US residents. Why? Because traders don’t like the NFA telling them what to do.
No wonder MetaTrader 5 was not well received. As we know, demand will dictate which product succeeds and which fails. In this sense, MT5 failed: there are so many other brokers offering MT4, than those offering 5.
This, my friends, is thumbs down; a big mistake on the MetaQuotes side. What were they thinking?
ITEM # 3: MQL4 VS MQL5
NOTE: If you are not interested in programming and algorithm business, then you can skip this section. But, don’t skip it all, since the conclusion is important.
What is Object Oriented Programming (OOP)?
The whole hype around MQL5 is based on bringing OOP to algorithmic trading. This is why many traders and programmers were so excited about MT5 in the beginning.
In simple words, OOP allows you to break down your programs into blocks. Each of these blocks is like a black box: something enters it and some result or action is produced:
In the world of programming this is very powerful for multiple reasons. In the first instance, once you have coded one of these black boxes for one of your Expert Advisors, you can clone them and use them in the next system you develop.
Also, OOP is great for collaboration. You can assign a developer to work with one group of black boxes and another for another group. Then you can put them together into a final program without needing to know what is inside each block.
As long as you know what goes inside and what goes outside, you can build a final product of them. That is why I like to explain the concept, using the term “Black Box”.
Wikipedia has a good article on OOP, if you want a little more information on this.
Is OOP Really That Important In Business?
In my opinion: NO
I have developed OOP software before (when I was in high school) and it was over 10,000 lines of code, really massive, tackling complex math programs and collaborative research projects to model the behavior of robots in mazes.
That’s when you really benefit from OOP. On the other hand, in business, when I have between 1000 and 2000 lines of code programmed, there is no need to complicate things. I am more than satisfied with the simple MQL4 and prefer its procedural nature.
I could expand a bit more on why or why not to use OOP when trading. But, I won’t because guess what?
Starting in version 600, OOP is available on MT4 as well. This happened in February 2014; If you want to know more details about it, you can consult our news section
So OOP is no longer relevant in the duel between MQL4 and MQL5. What is important is the compatibility with the previous version or, to be precise, the lack of it.
Incompatibility with the previous version
As you probably have already figured out, you cannot transfer your MQL4 code to MQL5 ; it just won’t work.
MetaTrader 4 took foreign currency trading by surprise thanks to its ability to run algorithmic trading systems or EAs. A large percentage of traders use EAs or custom indicators in their businesses. Moving these from MQL4 to MQL5 would be a very expensive and time-consuming exercise.
So why bother? If MT4 hasn’t depreciated, it’s easier to continue doing what you were doing the old way.
Some real advantages of MQL5
In fairness to MT5 developers, I would like to name two outstanding advantages that this platform has over the previous one:
- Multi-currency strategy tester.
- MT5 is superior to test and optimize. It is hundreds of times faster.
While the former is probably of interest to 10-15% of traders, the latter is a huge improvement. Faster optimizations mean less time spent setting up your EAs and more time out there doing what you want.
But, the backward compatibility issue really ruins all these features. You will spend a lot of time rewriting your code in MQL5 and debugging it than it will take to test your strategies on the slower MT4 platform.
CONCLUSION OF MQL4 VS MQL5
As we have discovered, OOP is no longer a sticking point because both versions have it.
There are some great advantages of MQL5 such as the multi-currency strategy tester and that MQL5 is faster when testing and optimizing. However, the lack of compatibility between MQL4 and MQL5 destroys all the benefits.
This is the cherry on the cake! Lack of backward compatibility is the second major reason why retail traders will not switch from MT4 to MT5.
PART B. Historical evidence
By now you probably know where this analysis is headed. This section is where we nail the MetaTrader 5 ballot box so you have no doubts about your future.
Using Google Trends we can visualize how often the words MetaTrader 4 and MetaTrader 5 have been searched in the last 10 years:
We can see that the hype began to build around the MT5 after its imminent arrival was announced in early 2009. However, the curve flattens out just after the Beta version was released in October of that year and the trend he has not recovered since.
MT4 searches, on the other hand, have been growing since its inception until early 2010. Then a stable period came between 2010-2012 and again it increased its growth again in 2012 and is still continuing.
This is a great illustration of what we talked about earlier; demand for both platforms. It is clear that the number of traders searching for MetaTrader 4 is constantly growing, while interest in MetaTrader 5 has been stagnant for the last 5 years.
The chart for MQL4 and MQL5 is surprisingly different:
Although MQL4 is still searched almost twice as often as MQL5, the gap is closing. The programming language of the former was raided in early 2009 (in connection with the announcement of MQL5?). At the same time, interest in MQL 5 increased steadily, peaking in mid-2014.
However, let’s not forget that interest in the specific programming language is not illustrated, but rather interest in the search term. Over the last couple of years, MetaQuotes has been actively developing the MQL5 community (which is for both MQL4 and MQL5 programmers). This could be the reason for the increase in searches for “MQL5”.
Let’s do a bit of data mining!
If we go to the MetaTrader 4 news and releases page and do a simple online research, we can collect all the release dates, updates and patches that have come out for MT4 from 2008 to mid-2015.
Putting all these updates together we create the table below, which basically illustrates the number of updates that took place in each month (The vertical axis on the left of the map goes from 1-4 updates in the indicated month).
Note that this table does not take into account the importance of the updates, but simply the number of them:
MetaTrader 4: Number of versions / monthly updates:
Here we see four different areas:
- Area A. Before the launch of MetaTrader 5.
- Area B. The year and a half after the launch of the MT5 Beta.
- Area C. The next year and a half.
- Area D. The next three years.
We see that before the launch of MT5 (Area A) there was at least one update per month of MT4 on average. Which is reasonable.
Area B. As soon as the Beta version of MT5 hit the market, the updates for MT4 stopped. There were three bug fixes along the way, but that doesn’t really count.
What do you tell us this? One could say that MetaQuotes were so busy with MT5 that they had no time for MT4. I say that MetaQuotes had no intention of holding MT4 any longer. In fact, they were waiting for MT5 to come out and take over the market to completely displace its predecessor, just as they did with MetaTrader 3 in 2005.
However, history has told us that this did not happen for the reasons discussed above; traders didn’t want to migrate to MT5. And, after waiting a year and a half, MetaQuotes finally gave in.
At the beginning of 2011, the MT4 updates began to see the light, slowly, again. They weren’t major updates, but minor fixes, yet at least something was happening.
I imagine that MetaQuotes finally got used to the defeat of MT5 in early 2012. Why? Because that’s when MT4 finally started catching up with MT5: in February 2012 MT4 came out for Iphone (1 year after MT5) and, two months later, it arrived for Android (just 6 months after its successor).
Then came period D when substantial MT4 updates started coming out regularly. Among them, the legendary Version 600 , which introduced the new MQL4 programming language, added the MetaTrader 4 markets tab, and incorporated the User Account Control (UAC) system, which everyone hates now. , but it is necessary that an application have it if it is going to be compatible with Windows 8 and higher versions.
What does the history of version 600 tell us?
The 600 version, my friends, was the final nail in the MT5’s coffin. It would have cost an incredible amount of money for MetaQuotes to fully adjust MetaTrader 4, so they released version 600. Being a software development company they would not do an update of that magnitude for a product that they are planning to abandon in the future. not too far away.
I think MetaQuotes hoped not to have to do this; they expected MT5 to take over and that they could leave MT4. However, four years after the launch of the new platform, traders still preferred the old one and developers had no choice but to invest in a new MT4.
With version 600 we win! MetaTrader 4 stays!
MT4 vs MT5 CONCLUSION
A long time ago I worked very closely with a director of a now very large stock brokerage company. Although we no longer work together, we still keep in touch and a couple of years ago he asked for my opinion on MetaTrader 5.
The advice I gave him was similar to what I am giving him in this review. Basically, I was one of those who believed that he should not force his clients to switch to MT5. Traders greatly admire the MT 4 and always will.
I think this was in 2011-2012. It has been 3-4 years since the company has yet to offer MetaTrader 5, and they are doing well. Good for them.
- MetaTrader 5 was developed with equity between the US markets and more in mind.
- MetaTrader 5 will sell quickly to Forex traders in the likely future for two main reasons:
- NFA heavy encryption without coverage rule.
- No compatibility with the old MQL4.
- MetaQuotes is investing substantial amounts to further develop MetaTrader 4, which means that the preferred MT4 will remain in service for a while.
As an expert trader, I stick with MT4 and not MT5. If you are just starting out in Forex, do so with MetaTrader 4.
The same thinking can be applied to programming beginners; start with MT4 and MQL4. You will have a lot of fun and your skills will be applicable to many other broker agencies.
The bottom line for expert programmers is a bit different: if you think you will need the multi-currency strategy tester, as well as the super-quick evaluation and optimization feature, then give MT5 a try. However, it will only pay off if you can commit to building your systems from scratch.
At the same time, MT 4 should have as many things as a programmer will need, including OOP (Object Oriented Programming). If that’s not enough, then instead of MT 5 you can try using DLL or even another platform with good API like jForex from DuskasCopy.
Thank you for increasing your power through this monstrous article of more than 3700 words.
I hope you enjoyed this trip.
Question of the day: What do you love most about MetaTrader 4?
Leave your comments below