The choice of a trading platform is a tough decision on the trader’s part. More so, brokers don’t have all the platforms that you want. It only supports very few ones. In this case, before you hire a broker, it is better to choose the platform that you will use to avoid getting into complicated situations later on.
When it comes to the best trading platforms, the choices are narrowed into two options – the MetaTrader 4 and MetaTrader 5. Both are from the same company and yet, they have different markets to target and features to boast.
It is worthy to be mentioned that MetaTrader 5 is considered as the unlikely choice for traders in the Forex market. So, if both options are offered by your broker, either MT4 or MT5, it is most preferable to choose MT4.
Why? The main reason here is the fact that this version of the trading platform has actually no limitations and it allows traders to take its full potential. But when it comes to MetaTrader 5, there are a set of rules that strictly needs to be followed.
Also, not all of your trading strategies can be used and applied in MT5. Nonetheless, the decision lies solely on the trader’s side.
Comparison of MetaTrader 4 and MetaTrader 5
When comparing two trading platforms that almost have similar characteristics, it is best to check their differences first. If so, there are quite a few differences between MT4 and MT5. Traders must be able to know these things before actually choosing the trading platform that’s best for their needs.
There are limitations in MetaTrader 5 that are not found in MetaTrader 4 despite their almost the same interface. One of the limitations is the inability to use hedging on the same trading account as well as the First in First Out (FIFO) rule that needs utmost respect.
Hedging is when you open two trades of the same currency but in opposite directions. When you say full hedge, the volume of the two trading positions is the same while partial hedging means that they have different volumes.
Forex trading is risky and every trader needs to know that. Hedging is also known to be a risky trading strategy in Forex. Because of this, there are some regions that prohibit the use of hedging. Just like in the United States, hedging is prohibited that is why MetaTrader 5 is the trading platform mostly used there.
FIFO is another limitation set in these trading platforms. This rule states that trades with the same currency pairs should only be closed according to their opening. This rule is something that needs to be respected especially if the broker is from the United States.
For instance, the trader buys EURUSD at the start of the trading week. You have put so much thinking about it only to find out that the trading is not as straightforward as you planned it to be. Markets are only making fake moves instead of trending.
You want to close the trades that gained profit while maintaining the ones which show the loss. This is not possible under the FIFO rule.