What is the difference between MT4 and MT5?

MetaTrader 5 is not an update or modification of MetaTrader 4. It is often assumed that MT5 is a new version of MT4. In fact, MT5 was built from scratch and has a substantially different architecture. MT5 was created to provide certain functions that could not be added to MT4 due to its original architecture. In particular this applies to the way orders and positions are handled.

Each platform has different functions and its own peculiarities. While there are a lot of similarities between the two platforms, there are notable differences. For most purposes MT5 is easier to use and provides more functionality. However, there are instances where traders may still prefer MT4.

MT4 was designed specifically for forex traders. It was released in 2005 and was initially created with forex traders in mind. The platform is also well suited to CFD trading but is not suitable for trading centralised markets like stocks and futures.

MT5 was designed to provide traders access to stocks and futures. It is a multimarket platform and can be used to trade any type of instrument. This includes centralised markets like stocks and futures, as well as forex and CFD markets.

1. Hedging and netting versions

MT4 offers hedging accounts only, while MT5 offers hedging and netting accounts.

A hedging account has no limitations on the number of positions that can be held for the same instrument. This means long and short open positions can be held on the same instrument.

A netting account consolidates all positions into a net position. Long and short positions are netted as a single position.

The type of account affects the way margin is calculated and whether or not the FIFO trading rule can be applied. While these functions are limited in MT4, brokers can also limit the types of accounts available, and the way margin is calculated in MT5.

In addition, positions in hedging accounts can be closed by netting them off against one another. Thus, a long and a short position in a hedging account can net one another off, with only a residual position remaining.

2. Pending orders types

MT4 includes 4 types of pending orders. MT5 makes two new types of pending orders available: buy stop-limit and sell stop-limit orders. These order types allow traders to add a limit to conditional orders. This gives traders control over the price at which a stop order will be executed.

3. New timeframes

MT4 offers 9 different timeframes, while MT5 includes 21 timeframes. Besides the widely used timeframes available in MT4, MT5 includes: 2-, 3-, 4-, 6-, 10- and 20-minute, as well as 2-, 3- and 6-hour timeframes.

4. Better strategy tester

MT4’s strategy tester is single threaded. This means only one test can be run at a time. MT5 includes a multi-threaded strategy tester.

This allows back tests to be run simultaneously on multiple instruments. MT5’s strategy tester can also be run on more than one currency and can use real time ticks.

In addition, back test results on MT5 include graphical displays and can be exported to Excel.

5. Tick history data availability

MT5 provides immediate access to tick and 1-minute historical data. In MT4, this data needs to be downloaded manually. MT5 also accommodates real volume data, rather than tick data. Time and sales data can also be accessed and viewed if provided by an exchange.

6. New technical indicators

MT5 includes 8 new technical indicators in addition to the 30 available in MT4.

7. New financial markets

MT5 was created specifically with stock traders and futures traders in mind. The addition of netting accounts, market depth and various new types of orders makes MT5 ideally suited for trading centralised markets.

8. Level 2

MT5 offers market depth, showing bids and offers with volume at different prices. This information is of crucial importance for stock traders. Time and sales data can also be viewed for certain markets.

9. Orders fill policy

MT4 offers FOK (Fill or Kill) orders which cannot be partially filled. MT5 offers IOC (Immediate or Cancel) and Return orders. IOC orders allow for partial fills after which the order is cancelled. Return orders allow for an order that is partially filled to remain opened.

10. Partial fill

In MT5 users have control over whether partially filled orders are cancelled or remain opened.

11. New analytical objects

While MT4 includes 31 analytical objects, MT5 includes 44 objects. These graphical objects can be used to identify trends, cycles and support and resistance levels.

12. Ability to transfer funds between accounts

Both MT4 and MT5 are multi-account terminals. This means multiple accounts can be set up and traded on one platform. MT5 adds the ability to transfer cash between accounts on the platform. This functionality is not available on MT4.

13. New programming language (MQL5)

Programming languages have evolved quite a lot since MT4 was first created. MQL5 is a more modern language, very similar to C++. While it is a more modern and more advanced language, it is more complex to use and has a more complex syntax.

MQL5 also allows chat screens to be embedded on the platform, allowing traders to communicate with one another.

Do MT4 EAs/indicators work in MT5?

No, in most cases they will not. The programming languages are very different. In some cases, simple changes can be made to make an MT4 Expert Advisor or indicator work in MT5, while in other cases the code will need to me rewritten.

Is MT5 faster than MT4?

Yes. MT5 is a 64-bit, multithreaded platform, while MT4 is a 32 bit nonthreaded platform. Even if MT5 is run on a 32-bit operating system it will be faster than MT4.

Is MT5 better than MT4?

MT5 has more functionality and can be used to trade more markets than MT4. It is not necessarily better but can be used to do more.

For forex traders who are happy with the slight limitations, MT4 is perfectly adequate. For those traders wanting to trade other instruments or do more advanced back testing MT5 is a better option.