MT5 Is Replacing MT4? Here’s What Happened in 2021

The year 2021 seems to mark a turning point for MetaTrader 5 (MT5). According to the official data published by Metaquotes​ this November, the percent utilization of MT5 trading servers by brokers has surged by a factor of 1.5 to 63.3% ever since its updated version was released, while that of MetaTrader 4 has dropped to 36.7%.

Expanded use of MT5

This growth coincides exactly with Fazzaco's reports on the software. According to Fazzaco news team's coverage, 6 more brokerage firms have launched MT5 trading platform throughout the year, including Fullerton Markets, VT Markets, HonorFX, Tickmill​, etc. Additionally, 10 have expanded their use of the platform by launching it in new regions or adding new products to the trading platform. Examples include:

March-2021: Driven by the surging demand from clients, Forex and CFD broker M4Markets expanded its product offering on MT5 to include more popular Share CFDs such as Alibaba, Netflix, Apple and Microsoft. That was only 3 months after the broker incorporated the MT5 platform into its offering.

July-2021: Libertex​, a Cyprus-based brokerage firm who had saw a shift in the market demand towards MT5, announced the offering of the trading platform to its European clients.

August-2021: Infinox, a multi-regulated FX and CFD broker, added MT5 technology to its social trading platform, IX Social. Additionally in October, the broker further launched MT5 trading platform for Southeast Asian Markets.

October-2021: Online broker FxPro​ added over 2,000 new share CFDs to its MT5 platform. The UK brokerage started to offer its clients the MT5 trading platform as early as March 2015.

December-2021: Following the partnership with leading fintech firm HokoCloud to offer a social trading platform on MT5 in the previous month, CFI Financial Group, a retail FX and CFDs broker, further expanded its MT5 trading offering with the addition of more than 3,500 US exchange-based stocks.

The momentum MT5 gained is shown to also impact the offering of trading platform-related technology and service solutions. Back in April, Centroid Solutions, the leading FX technology provider, went live with a new package solution to brokers using MT5 trading platform, including a tailored dedicated hosting solution and a high-performance and customizable bridging and connectivity engine, connecting the MT5 trading platform to any number of LPs as chosen by the broker. In the same month, IS Prime, a provider of full service multi-asset brokerage and execution, expanded its offering of White Label solutions with the addition of MT5.

Growth of the algorithmic trading market

MetaQuotes developed the MT4, a market-dominant platform since 2005 thanks to its ease of use and all-round functions. MT5 appeared 5 years later as an updated version. Unexpectedly, no clue whatsoever suggested an imminent replacement until this year. An important reason why the recent change happened possibly lies in the strong growth of the algorithmic trading market.

According to a report by Mordor Intelligence, the algorithmic trading market is expected to witness a CAGR of 11.23% over the forecast period (2021-2026).

Attributors to the need for the market expectedly include favorable government regulations, increasing demand for fast, reliable, and effective order execution, growing demand for market surveillance, and reducing transaction costs. Furthermore, an increasing number of institutional investors and big brokerage houses are using algorithmic trading to cut down on costs associated with bulk trading.  

The emergence of AI in the financial service sector is also expected to be a major factor in the growth of the algorithmic trading market. Another development that is expected to play a significant role in the growth of the market is the cloud-based algorithmic trading platforms, which help traders automate their trading process, easy trade data maintenance, cost-effectiveness, scalability, and effective management.

Algorithmic trading in MT5

Though MT5 uses a more difficult programming language than MT4, the advanced trading platform has a noticeable advantage over its predecessor that the strategy tester in MT5 has been significantly improved to work as a unique tool to optimize the algorithmic trading.

Compared to MT4 where only one processor core is used for optimization, MT5 adopts the MQL5 Cloud Network model which can be used to combine the power of hundreds of processor cores, allowing traders to quickly optimize their automated trading with several times more accuracy.

The backtesting procedures in MT5 also enables traders to test an Expert on multiple currency pairs simultaneously based on tough control points, and have been recognized as the best and the most useful innovation introduced by the developers.

The MT5 was developed, meant to replace its predecessor MT4. The developers tried to upgrade the technical analysis options, tester and order execution options in it to build a state-of-the-art multi-asset platform. However, something went wrong. The revised platform didn't gain in the same popularity with global traders as the MT4 in a long period of around 10 years. But as 2021 has seen a marked change in the situation, do you expect that MT5 will entirely replace MT4 in the foreseeable future?