Broker to Trading

MetaTrader 4 is a platform offered by a range of brokers. It is known as a Forex trading platform, though brokers typically provide other markets. MT4 actually has a successor, called MT5, but MT4 continues to be offered and is currently more prevalent.

MT4 supports Forex trading in a number of ways. Firstly it has charting, indicators and graphical object enabling the trader to analyse markets. But it is at least as well known for its Expert Advisors, also called EAs. EAs are computer programs which codify trading strategies. When a trader trades they may use a strategy, such as entering and exiting on a signal given by a technical indicator. EAs use these rules, or algorithms, to let a computer program trade on behalf of the trader.

There are potential advantages and disadvantage to using automated trading strategies. Potential advantages include that a computer does not tire and can execute instructions accurately, assuming there are not problems with hardware or software or connections. To deal with connectivity issues, and also to allow the trader to trade when their computer is not connected to the broker, a Virtual Private Server (VPS) may be used. This is a computer which hosts EAs. The Forex market itself is always on from market open on Sunday to close on Friday and has a range of markets within in, covering liquid to illiquid markets. Thus using automated trading strategies can be a way to enable the trader to access the market even when they cannot be at the computer.

However disadvantages include that the computer program cannot exercise human discretion and by executing strategies can incur significant losses called drawdown, which may or may not be made up for when the strategy is completed. It is also impossible to know whether a strategy will work. It is possible, using correctly formatted market data, to backtest a strategy on past data. But because it worked in the past, does not mean it will work in the future, market and other conditions change. Like everything in trading backtesting can indicate something, but not whether it will work. It becomes, like automated trading, a tool in a toolbox to tackle the complexity and difficulty of the vast and varied Forex market.

This toolbox can certainly include and for some traders may only include tools such as charting and technical and fundamental data to allow the trader to trade at their own discretion. The potential drawbacks to this of course are that the market runs continuously and the trader may not be able to trade in a particular trading session. However there are ways to deal with this, including working with one or a core group of markets and a particular market session, which suits the trader.

Each market session (e.g. London, New York and so on) can have a structure to it, the run up, the open, the post-open, the bulk of the session, the pre-close, the close and post-close. Events or patterns which happened in previous sessions may see a kind of reprise in later sessions. One way to approach the complexity of the Forex market is to learn its behaviour as just as there are charting patters, there are also repeated patterns of behaviour, for example the way different levels of liquidity can affect different market sessions. This kind of knowledge can be helpful to the trader when exercising their discretion to trade as well as deciding what automated trading strategies to use.

For traders who wants to trade, for example, by executing strategies rapidly on a market as well as those who wish to trade at a time which may be inconvenient to them, then automated trading may be helpful, with the caveat that the trader's human discretion will be missing. Some MT4 brokers provide infrastructure for high speed order execution with no dealing desk intervention allowing a range of trading styles. This kind of broker may be useful to the automated trader, as well as discretionary traders.

On a more technical level, the programming language used on MT4 is MQL4 (MetaQuotes Language 4), which is similar to the C++ language (and also has origins in the C programming language). There are a number of different program types which programmers may write in MQL4. These include Expert Advisors, custom technical indicators (the trader can design their own indicator or use indicators designed by others) and scripts. Scripts are different from EAs as they do not execute based on ticks, but rather execute when initiated, thus they are used to perform operations which run and then finish, differing from both EAs and technical indicators which are either executing the algorithm or in tick waiting mode, once attached to the symbol window. So scripts are used to automate or add platform functions rather than run robots.

A wide range of Forex brokers offer MT4, but the brokers chosen for the table are prominent regulated Forex brokers which offer either MT4 as their platform or combine it with others and offer an account environment conducive to MT4 trading. All of the brokers allow the trader to use MT4 as a platform for the trader who makes their own decisions to execute a trade, and supports those who wish to use Expert Advisors and let a computer program trade on their behalf, executing an automated trading strategy. All of them have ECN accounts, thus letting the trader execute strategies in no dealing desk trading conditions, with fast order execution. The trader may wish to familiarise themselves with this platform of they are not already familiar with it and practice their trading on a Forex Demo account on MT4.