MT4 Broker vs. MT5 Broker: What’s the Difference?

For individual retail traders interested in forex trading, choosing between an MT4 or MT5 broker is an important decision that can impact your trading experience. As the two most popular retail trading platforms, MetaTrader 4 (MT4) and MetaTrader 5 (MT5) share similarities but also have key differences traders should understand when selecting a brokerage.

Overview of MT4 and MT5 Platforms

Introduced in 2005, MetaTrader 4 revolutionized retail forex trading by providing traders with an intuitive online trading platform and access to automated trading strategies through Expert Advisors (EAs). Over 15 years later, MT4 remains the most popular platform offered by the majority of brokers.

In 2010, MetaQuotes released the next-generation MetaTrader 5 platform with some enhanced capabilities targeting professional and institutional traders. The retail market was slower to adopt MT5, but it has been gaining traction in recent years, supported by an increasing number of brokers.

When choosing an MT4 broker or MT5 broker as an individual trader, it’s important to weigh the key factors that differentiate the two platforms:

Market Access

MT4 provides access to foreign exchange markets and CFDs on commodities, indices, cryptocurrencies, and more. MT5 includes all of those plus equities and additional futures markets. If access to stocks or futures is important, MT5 has the advantage.

Automated Trading

MT4 set the standard for retail automated trading via the MQL4 programming language for EAs, custom indicators, and scripts. MT5 uses MQL5, which expanded EA functionality but requires rewritten code. The larger legacy code base gives MT4 an edge for traders relying on EAs.

Tools & Analytics

MT5 introduced new tools like market depth charts, additional timeframe options, more analytical tools, an economic calendar, and new order types. The advanced feature set suits manual traders looking for robust analytics.

Ease of Use

The familiar MT4 interface still appeals to many retail traders. Custom indicators, EAs, and settings are easily transferable between MT4 brokers. MT5 requires more adjustments for traders switching platforms.

Making a choice: MT4 or MT5 Broker

With an overview of the MT4 and MT5 landscape, it’s time to weigh specific factors in choosing a brokerage to match your trading needs and preferences as an individual retail trader.

When choosing a brokerage for forex trading, it’s crucial to consider platform capabilities, market access, and trading tools. Whether you prefer the familiarity of MT4 or the advanced features of MT5, finding a reliable broker is key. Platforms like EarnForex can help you compare brokers and make an informed decision based on your trading needs.

Trading Style and Strategies

The first consideration is your general trading style and strategy. Are you a manual trader looking for advanced analytics and tools? Do you rely on automated trading systems? Answering this will help narrow down the decision on your platform.

If you utilize EAs and custom indicators, it makes sense to choose an MT4 broker to transfer these between platforms seamlessly. Manual traders who do not rely on automation may find that the upgraded toolset of MT5 suits their approach. If you employ a mix of methods, consider which platform best aligns with your primary strategy.

Markets and Instruments Traded

Along with trading style, the assets and markets you focus on trading should guide your platform selection. MT5 opens access to a wider range of instruments like equities and futures. If you only trade spot forex and basic CFDs, MT4 provides everything needed to service retail traders.

Equities traders will require an MT5 broker. Those trading cryptocurrency may also prefer MT5 brokers that offer actual crypto coins versus CFDs on crypto offered by MT4 brokers. Review instrument listings carefully when comparing brokerages.

Broker Regulation and Reputation

While the trading platform is vital, the brokerage itself matters just as much in providing a safe, reliable trading environment. Consider factors like:

• Licensing and registration with tier-1 regulators like ASIC, CySec, and FCA
• Years in business and industry reputation
• Range of account offerings suiting various trade sizes and experience levels
• Funding and withdrawal options and processing times
• Customer support responsiveness and localization

Established MT4 brokers still lead in these categories. However, a growing field of well-regulated MT5 brokers now provides excellent service, particularly for active traders needing MT5’s robust toolset.

Transition Considerations

If switching between platform providers, ease of transition is another factor. Transferring profiles, trade history, indicators, and EAs between MT4 brokers is simple. Migrating from MT4 to MT5 requires reconfiguring profiles, rewriting EAs in MQL5, and adjusting strategies.

For first-time traders, starting on MT5 may make more sense than learning MT4 and later transitioning platforms. Traders comfortable with MT4 can certainly stick to their established set up under a new broker if other needs align.

Key Differences Between MT4 and MT5 Brokers

Drilling deeper into practical differences when evaluating MT4 vs MT5 brokers supporting retail forex and CFD traders:

Spreads, Execution, and Trading Costs

Spreads and overall trading expenses can vary greatly between brokers rather than platforms. Larger MT4 brokers still command some advantage in leveraging scale for lower costs that they can pass to clients.

However, for active traders, MT5’s ECN-style execution model can provide tighter spreads with direct access to interbank liquidity pools through the broker’s bridge. The electronic communication network execution differs from MT4’s dealing desk model.

In general, review average spreads across each asset class traded commissions if applicable, as well as non-trading fees when comparing broker costs.

Charting, Indicators, and Analytics

MT5 continues building on MT4’s charting capabilities with additional indicators, timeframes, drawing tools, and analysis features suited to active traders. This includes an economic calendar, market depth maps, and options analytics for modeling positions.

For traders relying on technical indicators and advanced chart studies, the MT5 toolset provides an advantage that appeals to manual traders. Automated traders are still well-equipped with MT4 charts and indicators.

Order Types

MT5 order types also expand on MT4 functionality to provide more flexibility in managing positions. These include iceberg, trailing stop, and connected orders like one cancel the other.

The expanded order management options allow manual traders to implement more dynamic position strategies. MT4 order types still cover basics like market, limit, and stop orders for typical retail trading.

Cryptocurrency Trading

Another point of differentiation is crypto trading - something gaining popularity across retail traders. MT4 brokers only offer CFDs on leading cryptocurrencies, not actual coin holdings.

MT5 brokers are starting to provide exposure to underlying crypto coins and wallet integration. For traders prioritizing bitcoin, ether, or other altcoins, this provides a distinct advantage over CFD contracts.

Automated Trading Needs

MT4 remains the undisputed leader for retail traders utilizing EAs and custom scripts to automate strategies. The ongoing community development around MQL4 and the sheer volume of publicly available indicators keep MT4 well ahead.

MQL5 and MT5 EAs now support advanced position management, object-oriented coding, and multi-currency backtesting not available in MT4. However, the legacy MT4 platform still offers the most compatibility out of the box.

So, for traders relying on automation in some form, MT4 brokers provide the most seamless transition of established scripts, advisors, and indicators to hit the ground running. MT5 automated trading requires redeveloping code and macros in MQL5.

Customer Support and Resources

In general, MT4 brokers provide better-localized customer support and educational resources catered to retail traders. This stems from MT4’s longer-standing presence in the industry. Size and years in business also allow leading MT4 brokers to fine-tune client services.

That’s not to say MT5 brokers have poor customer service - many provide excellent localized teams and trading education. However, on average, MT4 brokers maintain an advantage in overall client support quality and trading resources.

Final Thoughts on Choosing an MT4 or MT5 Broker

For most individual retail forex and CFD traders, the updated toolset in MT5 seems to provide clear advantages over the venerable MT4 platform. But in reality, the decision between an MT4 or MT5 broker comes down to your specific trading priorities:

• Automated Traders – Utilizing EAs, scripts, and custom indicators, MT4 provides seamless transitions and a larger code base; stick to MT4 brokers.
• Active Manual Traders – Requiring advanced analytics and order management, MT5’s features justify brokers supporting this platform.
• Crypto Traders – Preferring actual cryptocurrency trading, an MT5 broker with crypto wallet integration is likely the better fit.
• Equities/Futures Traders – With MT5 providing exclusive access to additional markets like stocks and futures, this platform is required.

The reality is that most established retail brokers now offer both MT4 and MT5 platforms. Having the ability to run accounts on both is ideal for traders employing different strategies. Consider trying demo accounts across brokerages to determine the best fit on both technology and service fronts.

While still popular, given its familiar interface, MT4 is aging technology at its core. MT5 delivers key upgrades that support sophisticated trading activities seen among active retail traders. As brokers continue adopting and integrating MT5, expect its popularity to eclipse MT4 over time across the majority of individual traders focused on forex and CFDs.