What is MetaTrader 4?

What is MetaTrader 4?

MetaTrader 4, also known as MT4, is an electronic trading platform popular among online retail foreign exchange (forex) traders. The software is licensed to forex brokers who, in turn, provide the platform to their clients.

The platform was developed by MetaQuotes, a software developer for brokerages based in Limassol, Cyprus. Founded in 2000, MetaQuotes’ first product was FX Charts released in the same year. 

Since its establishment, MetaQuotes has released five generations of trading platforms. MetaTrader 4 was the company’s fourth generation trading platform, released in 2005. It quickly became the standard platform for forex trading globally. 

What made MetaTrader 4 different from its predecessors was being equipped with trading robots (Expert Advisors), which allowed for automated trading. The platform has MQL4 IDE (Integrated Development Environment) that users can use to develop trading robots and technical indicators. 

Expert advisors can perform trading actions such as analysing forex price quotes and taking positions based on predetermined algorithms. The automated trading uses algorithms to open and close trade on a user’s behalf based according to a set of parameters. 

MetaTrader 4 users can develop trading bots by downloading them with a free guide from Code Base. They can also rent or buy bots from a wider market or freelance developers. These trading robots can be built on the MetaTrader 4 platform using plug-in credit-card size Raspberry Pi 3 and Python integration.

Other features that made MetaTrader 4 stand out was its ability to be tailored to individual trading goals and preferences. Although MetaTrader 4 is typically associated with forex trading, it can be used to trade other asset classes and instruments such as cryptocurrencies, futures, stocks, contracts for difference (CFDs), and commodities.

Key points

MetaTrader 4 explained

The software consists of a client and a server component. The server component is run by the broker. The client software is provided to the broker’s customers, who use it to view live streaming prices and charts, place orders and manage their accounts.

The platform focuses on margin trading. Some brokerages use MetaTrader 4 to trade CFDs, but it isn't designed for full-time work in the stock market or exchange-traded futures (ETFs).

To use the application, traders should download the MetaTrader 4 software from the website or from online brokers when registering for an account, either real or demo.

Information of trading costs, commissions, and spread will be given once the user signs up. 

The application has straightforward and basic components:

• Symbol: for users to choose markets – forex, indices or other assets

• Volume: for users to set their trade size

• Type: to choose trade execution after hitting ‘buy’ or ‘sell’ button

• Stop-loss: to limit or minimise losses size 

• Take-profit: to set automatic exit when profit hit a certain point

• Comment: for adding trading commentary

• Slippage: limit slippage by setting ‘deviation’

Key MetaTrader 4 features 

How does MetaTrader 4 work? MetaTrader 4’s system allows users to instruct a broker to trade on their behalf. Depending on the circumstances of the trade, it has three options: market, pending, and stop orders. The selection as follows: 

• Execution modes: instant, request and market

• Market orders

• Pending orders 

• Stop orders: stop-losses and take-profit orders

• Trailing stop

MetaTrader 4 has three trade execution modes – instant, request, and market. What does MetaTrader 4 execution modes mean for traders? The selection of execution modes give greater flexibility for users to deploy trading strategies that suit the market situations.

MetaTrader 4 examples of trade execution modes is when users need to enter the market at a certain price. This strategy can be requested prior to performing a trade using the request mode. Trade can be executed when the desired price appears. 

When users want to enter the market at a specific time regardless of price, they can choose the market execution mode. In this case, the broker opens a position at the current market price without further user confirmation. 

Users can use market orders for instant execution. When users want to execute trading later in the future when the market situation meets the specified conditions, they can create pending orders. 

Stop orders (stop-losses and take-profit orders) assists users in locking in profits when the price reaches a certain level, or closing a position when the loss is too high. They were used in conjunction with market or pending orders, as well as an existing position. 

Users can automate stop-losses using trailing stops. Instead of manually shifting the stop-loss to break-even level, a trailing stop does this automatically. 

MetaQuotes has discontinued support for MetaTrader 4 after it launched the latest version of MetaTrader 5 in 2010.

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