Though more companies are offering MT5 now, it is nowhere near MT4 in terms of trading volume.
MetaQuotes Software launched MetaTrader 5 (MT5) in 2010. Despite the added features and many advantages over the predecessor, MetaTrader 4 (MT4) still remains the favorite forex and CFDs trading platform of both brokers and traders.
But, things have changed. Recently, the Russia-originated software company announced that the number of companies using MT5 has exceeded the ones using MT4 this month.
This is an achievement for MetaQuotes as it took the refreshed version 11 years to overtake its predecessor in some form even after a massive push by the company. But, what has changed?
MT5 Is Superior, No Doubt in That
MT5, is no doubt, a superior trading platform than MT4. The new version supports trading in a wide range of markets, compared to MT4, which only supports forex and CFDs trading. In addition, the platform provides better control with the need for fewer third-party plugins and comes with an STP Gateway that allows any MT5 broker to connect directly to any other MT5 broker for liquidity.
“The main benefit we see of MT5 is the technological updates done by MetaQuotes. That makes it much more versatile for our traders,” Deepak Jassal, Executive Director of M4Markets, told Finance Magnates.
“Because of the technology that powers it, MT5 has a lot more capabilities, and it simply offers more trading tools to the user, it should be the tool of choice for traders.”
Despite being technically superior, MetaQuotes had to push a lot to force brokers to adopt the refreshed MT5. The company stopped selling MT4 in January 2018 and also brought drastic changes in its pricing, making the new platform much cheaper than the older one.
“From the broker’s perspective, it can be the recent question of pricing,” said Michał Karczewski, Co-Founder, and Chief Operating Officer at Match-Trade Technologies, a trading industry technology provider.
“After MetaQuotes has changed its pricing policy and has waived off the license and setup fees for white label platforms, the monthly cost of the MT5 platform is significantly lower than the MT4 fee, though it comes with certain restrictions.”
Data Shows MT4’s Dominance
Despite all these efforts, it still remained tough to challenge the dominance of the legacy platform.
According to the data gathered and compiled by Finance Magnates Intelligence, 84.5 percent of the trading volume distribution on MetaQuotes’ platforms was dominated by MT4 in Q4 of 2020, while MT5 managed to have the rest. Further, MT4 dominated the entire market with around 66 percent of the market share at the close of 2020, while MT5 and other platforms closed at 12.7 percent and 21.3 percent, respectively.
Though these figures were only collected from a few brokers and do not represent the entire industry, they surely show the trend and inclination of traders.
“MT4 is a cult platform, and its release in 2005 was a breakthrough on the forex market; therefore, its successor, despite evident improvements, needed many years to match this success,” Karczewski added.
MetaQuotes surely revealed the recent dominance of MT5, but that figure only for the companies using MT5, not the share of the executed trading volume.
Karczewski pointed out that many brokers are just supplementing their existing MT4 offering with the addition of the MT5 platform.
“Brokers who already have the MT4 platform do not transfer to MT5; instead, they purchase MT5 as a second platform to give their clients a choice.” This trend can be seen even with M4Markets, which offers trading services with both MT4 and MT5.
MT5 Will Replace MT4, but Slowly
But, the industry remains optimistic about the future of the MT5. The slow, yet definite, adoption can be anticipated from 7 million lines of code already written on MT5, while the figure only remained at 2 million for the previous version.
“Yes, currently MT4 is still popular among both old school and new traders; however, we believe that traders will move from it in the near future,” said Andreas C. Kapsos, Managing Director of Match-Prime Liquidity.
Also, with the terminated support and development of MT4, brokers and traders need to ultimately make the tough decision of changing to the updated platform. Further, MetaQuotes said that it is planning to bring ‘many important and useful updates’ on MT5, but MT4 will obviously be deprived of them.
“Although a lot of traders continue to use MT4 because of its familiarity and because it’s been around for so long, it has been the go-to platform for all of us. I expect that things will start changing, and more traders will opt for MT5 as brokers transition clients to it,” Jassal added.
Another trend pushing MT5 adoption is the broker’s rush to add additional trading services. Many brokers have recently started to offer stock and futures trading services along with usual CFDs trading.
Kapsos said: “The MT5 client interface is very similar to MT4, and it comes with additional features, so we strongly believe clients will slowly shift to a new platform and take advantage of all features. It was developed to attract traders by offering access to a multi-asset platform, whereas MT4 offers limited access to execute forex trades, CFDs and crypto. Therefore Metatrader 5 covers a broader audience of traders.”
But, the challenge still remains as it is difficult to change the traders’ psyche. The familiarity with MT4 has become a major resistance for a switch to a better-featured platform. However, the transition is imminent. “We are seeing exactly what MetaQuotes is seeing, a lot of our traders are transitioning to MT5 because it’s so much faster,” Jassal added.
Moreover, the market insiders are not surprised with the latest revelation of the MetaQuotes, as Kapsos thinks that “it is something expected and logical since the MT5 was designed to facilitate multi-asset trading, and better serve both traders and brokers.”
But the Question Still Remains: How Long?
“MetaQuotes has been striving to extinguish the MT4 platform for a long time,” Karczewski continued. “They have not been developing or supporting it for years, the sale of MT4 Servers has also ended, so this is a natural result of the adopted strategy. However, I can see several reasons why MT4 WL is still very popular.”
“First of all, the MT4 platform is much easier to manage, especially for a beginner broker. Second, even though the full MT5 Server cost starts from $5000, this basic package doesn’t include all the necessary features like a data feed or even a bridge to connect liquidity. So, despite the significant price reduction and making the MT5 server a lot more affordable, Brokers might still prefer the White Label solution – be it MT4 or MT5, as in most cases it already includes data feed, bridge and even CRM with payment gateway. All-in-one solutions are just more convenient.”