MetaTrader 4 (MT4) has been the industry standard since its release in 2005. But, Forex brokers seem to be switching over to its successor, MetaTrader 5 (MT5), in increasing numbers. Both these platforms set the industry standard for Forex and CFD trading, with reliability, efficiency, and functionality built in.
However, MT4 and MT5 have some significant differences, with MT5 building on the usability and offerings of its predecessor. With brokers having to decide between them, it has become clear that many prefer MT5. But why exactly is this?
This article will explore the distinct features offered to Forex brokers with MetaTrader5, and why they make it the preferred choice…
MT4 Vs. MT5
MetaTrader 5 was released on June 1st, 2010 by MetaQuotes Software Corporation. In their initial announcement for the platform, MetaQuotes highlighted that MT5 provided “plenty of opportunities”, including:
- Stock and Forex trading
- Technical analysis
- Fundamental analysis
- Programming trading robots
- MQL5 development environment
- Multi-currency strategy tester
- MetaTrader Market of trading applications
- Social trading
- Freelance service for ordering custom trading robots
The introduction of these features did improve on what MT4 offered. However, rather than being a replacement for MT4, MT5 was introduced to satisfy a different kind of broker. For those looking to move away from established markets and future-proof their trading with various asset classes and sophisticated analytical tools, MT5 was the obvious choice.
MT5’s robust MQL5 development environment and multi-currency strategy tester empowered Forex brokers, offering complex strategies and accurate testing capabilities. Not to mention, the inclusion of social trading fostered a community-driven experience while embracing technological advancements.
Asset Classes
The diverse asset classes offered by MT5 allow Forex brokers to provide a range of trading options to their clients. In turn, this enables them to attract a varied clientele and cater to different preferences within the Forex market.
MT5 supports:
Forex Pairs – MT5 builds upon the offerings of MT4, providing increased options for trading currency pairs and improved execution capabilities. Forex brokers with MetaTrader 5 can provide clients with advanced order types and increased execution speed.
Stocks – Perhaps the most significant change from MT4 to MT5 was the inclusion of stock trading. This feature offers Forex brokers a unique chance to diversify their clients’ portfolios using a single platform, enhancing their appeal.
Commodities – These assets often have connections with currency pairs, allowing Forex brokers and traders the opportunity to hedge and diversify, especially in times of market volatility.
Cryptocurrencies – The inclusion of cryptocurrencies on MT5 is particularly appealing to Forex brokers seeking exposure in emerging asset classes. Brokers interested in offering diversification and access to speculative assets value this addition.
Indices – Global stock indices enable Forex brokers using MT5 to gain exposure to broader market movements. In particular, Forex brokers can use indices as indicators for their trading decisions, without ever leaving the platform.
Hedging vs. Netting
MT5 introduced a crucial feature in its hedging and netting capabilities. This provides Forex brokers with MetaTrader 5 the flexibility to offer both these strategies, and is yet another reason why many prefer the platform.
Hedging
MT5 enables the simultaneous holding of opposite positions in the same trading symbol. Because of this, Forex brokers and their clients can hedge against adverse market movements and mitigate risk.
Netting
MT4 did support the netting system, but MT5 offers this mode alongside the hedging system. This simplifies trade management by aggregating multiple positions in the same symbol into one position.
Broker Preferences
The inclusion of both hedging and netting in MT5 widens the scope of trading strategies available to Forex brokers. With trader preferences, risk management strategies, and evolving regulatory demands in mind, MT5 is the obvious choice for Forex brokers.
Back-Testing and Algorithmic Trading
When it comes to back-testing and algorithmic trading features, MT5 is the clear winner. The platform offers a more accurate and reliable strategy tester, due to improved tick-by-tick modeling, support for multiple time frames, more detailed analysis, and an integrated economic calendar.
This enhanced and precise testing environment for complex strategies is critical for algorithmic trading and Expert Advisors. With this, Forex brokers can easily attract and serve traders looking for automated trading solutions.
Unlike MT4, which treated testing as something of an afterthought, it is now easier than ever for brokers to support traders engaged in algorithmic strategies. The combination of accurate back-testing and advanced algorithmic trading features positions Forex brokers with MetaTrader 5 as the best choice for traders.
User-Friendliness
When it comes to user-friendliness, there are several reasons why brokers of all kinds prefer MT5. These include:
- Intuitive Interface
MT5’s interface improved upon MT4’s revolutionary user-friendliness. It is easy to navigate, with a clean and organized layout that facilitates a seamless and straightforward trading experience for brokers of all levels.
- Customization Options
MT5 offers extensive options for customization, a clear improvement on MT4’s limited modifications for appearance and tools. MT5’s interface can be altered to suit brokers’ preferences, creating a user-centric environment that features real-time quotes and financial news.
- Advanced Charting Tools
MT4 offers standard charting tools that lack the sophistication of MT5’s advanced features. With an expanded range of timeframes, MT5 caters to a broader range of strategies, improving brokers’ analytical capabilities.
- One-Click Trading
MT5 retained MT4’s one-click trading functionality, but improved the speed of execution, refining its efficiency and accessibility.
- Multi-Device Accessibility
Though MT4 allows trading across desktop and mobile devices, MT5 ensures cross-platform consistency. The adaptability between website, desktop, tablet, and mobile is seamless when using MT5, offering a uniform and convenient trading environment.
These improvements result in MT5’s intuitive, adaptable, and user-centric reputation, giving Forex brokers an efficient and enjoyable trading experience.
Market Adoption and Preferences
With the above information in mind, it is surprising to learn that, in comparison to MT4’s 1200 brokers, there are only a handful that support MT5. But, with much less competition on MT5, this is just another reason why experienced Forex brokers prefer the newer platform.
Referencing the broader industry move to MT5, Brad Alexander of FX Large, in conversation with financefeeds.com, stated that:
“The fin-tech companies, who provide services and plug-ins for MT4, were on the fence just over a year ago. Now, almost everyone we speak to has, or are developing, MT5 solutions…[In 2017], we made a business decision to concentrate on a generic MT5 offering, which can be white labeled and customized for any broker.”
This trend signals a wider market acceptance and migration towards the enhanced capabilities and offerings of MT5, aligning with the platform’s growing dominance and relevance in the financial industry.
While MT4 has long since been the industry standard for trading platforms, the industry switch to MT5 reflects a desire, on the part of brokers, to future-proof their operations. Brokers who use MT5 position themselves ahead of evolving market preferences and regulatory standards.
A more precise strategy tester, support for multiple timeframes, and expanded analysis tools, meet the requirements of experienced brokers. Those seeking enhanced features and looking to make use of technological advancements can only find these improved functionalities on MT5.
Not to mention, MT5’s improved user interface, advanced charting tools, and enhanced customization features align with the changing preferences of traders. This enables Forex brokers who embrace MT5 to attract and cater to the evolving demands of an informed and tech-savvy clientele.
Conclusion and Recommendations
MetaTrader 5 remains the main choice for Forex brokers. This is due to its comprehensive functionalities, adaptability to evolving market preferences, and technological advancements.
Forex brokers with MetaTrader 5 have a distinct competitive edge. Embracing the platform allows brokers to meet diverse trader preferences, comply with evolving regulations, and offer a sophisticated and comprehensive trading environment.
Sources
https://www.metatrader5.com/en/news/1352
https://www.earnforex.com/mt5-forex-brokers/
https://financefeeds.com/getting-ready-metatrader-5-interview-brad-alexander-fxlarge/
https://financefeeds.com/14-years-dependability-metatrader-stand-today/
https://www.softwareadvice.com/hedge-fund/metatrader-5-profile/reviews/ https://www.financemagnates.com/forex/technology/forextechnologythe-stubborn-move-to-mt5/