Trading on the foreign exchange market (Forex, FX) has become quite popular during the last decade and a half. This is largely attributed to the developments in the information technology sphere which made it quite easy to turn on your favorite device, register on the platform with a broker, and trade away to your heart’s content. However, there are a number of these platforms and some of them are better than others in certain aspects.
Trading on currencies is one of the oldest versions of trading that economies remember. It goes as far back as other things like stocks for example. The idea is that it was not accessible to most of the people across the world.
The currency exchange was going on behind the scenes involving a number of huge financial institutions like banks, hedge funds, and such. It was next to impossible to trade if you were an average Joe or Janette living your life with everyday jobs. However, things did change a lot.
Due to the development of the worldwide web, computers becoming more accessible and affordable as well as the invention of other devices like smartphones and tablets, things did change for the better. Namely, in 2005 when the first MetaTrader 4 platform was developed things started to look much like they are now.
After 2005 a lot has changed though. It has been 15 years since the original release and since then we have also come a long way. Now traders have a number of platforms available for them to start trading on in a short period of time from the comforts of their home.
However, due to the sheer amount of available options things are becoming more and more confusing day by day. For a starter trader, things are complicated. There are a number of things to pay attention to. He or she needs to understand all of the basics before they apply their knowledge.
- How does the market work?
- What impacts the currency pairs?
- Which broker to choose?
- Which platform to use?
- How much capital do they need to start?
And in addition to all of these questions, there are things to consider like what is leverage? What is spread? Answers to all of these questions are basically a necessity for every potential trader who wants to start making a revenue.
There is a small difference between trading software and trading platforms. There are quite a number of available trading software compared to their platform counterparts. It is worth noting that the ultimate decision is also linked with the individual broker since they provide services and trading software for respective platforms.
As we have already established forex traders have a choice between a number of platforms to use. MetaTrader 4 or MT4, is one of the oldest and trustworthy ones out of the bunch. The main draw for this one is its legacy content and the level of maturity.
MT4 was first released in 2005 and became the frontrunner of the whole digital FX industry. It was developed by MetaQuotes Software and offers a way for both investors and traders to open, close, and manage their positions in the simplest way out of the bunch.
MT4 can be used to perform some of the advanced trading operations while analyzing the financial markets at the same time. It sets itself apart from others with three trade execution modes, four pending and two stop orders, two different markets, and even a trailing stop function. The commands can be given out directly by clicking on the charts that are vital for any trader.
The platform has three main execution modes. These are instant execution, execution on request, and execution by market. The first one processes the trade at exactly the price which is offered to the broker.
Execution on request works so that market order is executed when the market price hits the spot which is provided by the broker. Execution by market means that the trader gives all of the rights to open and close positions to the broker without additionally asking authorization from the trader.
MetaTrader 4 is the most widely used platform out of all and thus most of the brokers offer services through there.
MetaTrader 5, or MT5 in short, is a successor to the MT4 platform. It was launched by MetaQuotes in 2010 and adds some vital functionalities to the table. While not as popular as MT4 it still draws a number of new traders and brokers to itself due to the modern approach that this platform is offering.
The reason why it stands out so much is that MT5 is a real multi-asset platform. While MT4 only deals in over-the-counter (OTC) products MT5 also has other assets available like stocks, equities, commodities, etc.
The MT5 also offers these assets over the exchange itself which means that there is no need for a broker to act like a market maker or intermediary. This rules out the conflict of interest that may be created during trade and leads to a much more fair execution.
HIstoric data is something MT5 has an advantage over its MT4 counterpart. In the latter to get accurate tick data, the trader has to import this information through external sources and mainly rely on charts to understand what is going on.
MT5, however, easily integrates this functionality into its platform. It is quite simple to just download accurate tick data from the broker’s server without any need for some outside source. Charts are also updated more frequently and provide information in a much better way than otherwise.
In addition to all of these MT5 is a straightforward update from MT4 with already existent functionalities. For example, in MT4 one can only have 9 different charts due to the storage limitations while MT5 has a whopping 21. The amount of bars that can be stored has also increased in a great manner and thus provides a much better way to understand and predict possible market movement.
cTrader is also one of the most popular trading platforms that boast top of the line functionality with the addition of cleaner and more modern design. The main idea is that this is a full package that is required to trade. It works great out of the box and has a number of helpful guides, indicators, and tools that work from the get-go.
One of the biggest draws for this platform is the ability of a trader to code in C# and open API which makes it possible to create specific scripts to automate your trading process.
The idea is that cTrader Automate (or as it was previously called – cAIgo) can be used in the hands of a knowledgeable trader as a powerful tool that can make the whole trading process that much less of a hassle. It has direct access to the interbank market and provides a number of presets as well as detachable charts that make the whole interface much more customizable.
There are a number of other platforms that we have not touched upon like NinjaTrader and others. However, we believe that MT4, MT5, and cTrader are the largest additions to the field of FX trading and provide more than enough to satisfy the needs of traders.
It is up to the individual to choose which one they prefer, however, most of the brokers still focus on MT4 and its successor – MT5. cTrader is available for more tech-savvy traders who can and like to code and automate their whole working process. All of them are very unique in their way and have their advantages. One can not go wrong with any of them.