Given the radical changes the online brokerage sector has undergone in recent years, how can a platform first released in 2005 still dominate the market to such an extent. This look at the pros and cons of MetaTrader platforms will establish the reasons the current situation came about, but also what that means in terms of how to get the best out of MetaTrader platforms and which broker is the best fit.
The History of MetaTrader MT4 and MT5
MetaTrader 4, also known as MT4, is an electronic trading platform widely used by online brokers. It was first developed in 2005 to cater to retail forex traders running speculative strategies. It introduced to the masses the tools and functionality previously reserved for professional traders. It was developed by MetaQuotes Software and continues to be provided under licence by forex brokers who offer their clients the MT4 platform and software tools.
The MetaTrader 5 (MT5) platform was released in 2010. It has similar functionality to MT4, but one big difference between the platforms is that MT5 is multi-asset. Traders who use it can access forex markets and also single stocks, commodities, stock indices, futures, and more.
Millions of traders and hundreds of brokers use the MetaTrader platforms. They are available in downloadable desktop format, in WebTrader versions and as mobile apps.
Which is Better – MT4 or MT5?
MetaTrader got a five-year head start on MT5, but the fact that MT5 didn't become more widely adopted straight away highlighted two features of the MT4 vs MT5 debate. The first is that MT4 offers precisely what many traders want from a platform. Those who began using it between 2005 and 2010 had little reason to change to any other platform, and MT4 still has a loyal fan base who adopt the mantra “if it ain't broke, don't fix it”.
MT5 not only offers multi-asset trading – it also has superior functionality. The number of indicators which form the default package of MT5 is 38, whereas it is several less for MT4. That means MT5 has more of the trend indicators and oscillators that MetaTrader users prize so much. There are also more timeframes available on MT5, with a default setting of nine (1, 5, 15, 30 minutes and 1 hour, 4 hours, daily, weekly, and monthly) and the option to create additional ones as well.
By 2021 the amount of MetaTrader 5 code had reached seven million lines, while the previous version had only two million, and all of that upgrading and development has paid off. June of that year was the time that MT5 became the world's most popular retail trading platform, with more brokers offering MT5 than MT4.
The small print in the statement made by Meta Quotes in June 2021 revealed one small detail. Their measure of use was the number of brokers using the MT5 platform rather than the number of traders. While MT5 will often be the favoured choice of those trading for the first time, many old hands know and love MT4 and look unlikely to move away from it soon.
Comparing MetaTrader MT4 and MT5 to Other Platforms
Despite their differences, MT4 and MT5 are similar enough to consider them as a pair when comparing them to other platforms in the market. The platform eToro built in-house is an example of a proprietary trading dashboard unique to one broker. The easy-to-use functionality of the eToro platform makes it ideal for beginners and copy traders, but it doesn't have charting tools to match those of MetaTrader. Alternative third-party platforms such as cTrader are also provided by some brokers, and Pepperstone offers its traders the chance to choose from either MT4, MT5 or cTrader.
Finding the best platform ultimately comes down to trying them to establish the best fit for you. Using Demo accounts to book trades using virtual funds is one way to kick the tyres and ensure that all boxes, from research materials to trade execution, are ticked. To help with the process, the AskTraders team have drawn on their experiences and those of the wider trading community. To answer the question, why are MetaTrader platforms so popular?
The MetaTrader Community is Huge
MetaTrader platforms have a ‘first-mover' advantage over other platforms because early adopters of forex trading built a community of MT4 users which continues to thrive. The online forum set up to support users of MetaQuotes Language 4 (MQL4) helps users integrate programming language and develop indicators and trading strategies for free. The crowd-sourced feel of the project extended to MQL5 when that was launched and also offers a source of expert advice and opinion to MT5 users.
None of the other platforms on the market has a community of this size, and it has been established for so many years that it would be remarkable if you could find a question which hasn't been asked and answered already.
MetaTrader and Automated Trading
Quant hedge funds which use algorithms and automated systems, dominate the financial markets. But when MT4 was first released, it marked a significant upgrade in terms of the systematic trading tools offered to retail traders. It was the first time the ‘little guy' got his hands on easy-to-use automated trading resources anywhere close to those used by the big institutions.
The Expert Advisors (EA) service was ground-breaking, and the fact that millions of traders and analysts who run systematic models use it means it's a great place to go to copy trade. There is also, of course, the option for successful traders to become lead traders and earn passive income from others.
The MetaTrader programming language is flexible, comprehensive, and easy to learn. It's also highly scalable and allows a potentially infinite number of automated strategies to be created, including those supporting trading techniques based on straddles, hedges, and scalping.
If you can't find a third-party EA or indicator, it's easy to develop one yourself, and if you're not a programmer already, the MT forums are a great place to start. Due to the enormous fan base, a lot of the groundwork on core models has already been completed by others, so those setting out to create a new model can piggyback off that code and don't have to “reinvent the wheel”. The positive vibe on the platforms has created a culture where it's easy to draw on the experience of others.
The Portability of MetaTrader
More than 300 different brokers now offer MetaTrader platforms. One neat feature of the MT services is that if you don't like your current broker or want to take advantage of improved T&Cs, you can easily migrate all of your EAs and indicators from one broker to another. You also avoid the downtime associated with learning to navigate a different platform.
Simply open an account at your new choice of MetaTrader broker and port your existing trade dashboard to operate on the new framework.
Cost-Benefit Analysis of Using MetaTrader
That vast number of brokers using the same third-party platform results in fierce competition between the firms. Commissions spreads, and financing charges continue to be hammered down, making trading on MetaTrader platforms increasingly cost-effective. At the same time, the platforms are incentivised to provide better additional services such as research and analysis resources to attract potential customers.
Other platforms such as Thinkorswim or eSignal offer a like-for-like service but require traders to pay up-front fees. These can be for having access to the platform, charting tools, data feeds, historical price data, testing facilities and much more besides. Then there are the fees charged by the broker to add on.
Traders making an initial outlay can feel ‘forced' into trading situations they might otherwise swerve. The need to generate returns to break even, as a result, puts undue pressure on the decision-making process. It can also result in traders with small accounts leveraging up on position size to trade according to their cost-base or to meet monthly quotas with their broker, rather than trading the market as it is.
One of the most significant factors in the success of MetaTrader MT4 and MT5 is that, in a self-fulfilling way, its success has given it a position in the market with which other platforms can't compete. When MetaTrader launched MT4, they got so much right that the platform became the ‘go-to' trading dashboard for retail traders. MT5 represents the logical next step in providing traders with what they want and need to trade successfully.
Alternative platforms offer a different take on trading and trying out new ideas is always a good thing. But for beginners, in particular, MetaTrader platforms provide a blend of powerful software tools and the support of a global community all wrapped up in one cost-effective trading platform.