How Important is the Trading Terminal for Forex Traders?
One of the most crucial aspects to consider when you start trading in the forex market, is choosing a broker who provides a robust terminal to trade on. In an age where trading and investment technologies are evolving at a rapid pace, outdated systems put you at risk of competitive disadvantage. This means missed trading opportunities and security threats.
MetaTrader 4 and MetaTrader 5 are two of the most sought-after trading platforms by millions of traders worldwide. These feature-rich platforms provide multiple benefits to users in terms of knowledge, flexibility and liquidity. Here’s why such systems are so important for forex traders.
Non-Latency in Trade Execution
Execution speed is one of the major benefits of a good trading terminal. It is critical for your long-term trading success. Non-latency allows trading activities to be conducted smoothly, without the system hanging, so that traders can execute trades at the desired prices. Inability to do so could lead to negative slippage.
Negative slippage occurs when orders get executed at a price less than what was desired at the time of placing the order. This happens because by the time the order reaches the market, the price might have moved downwards. This means that the ask price increased for long positions and the bid price decreased for a short position. This affects trading outcomes, especially for short term traders like scalpers, who get into multiple positions through the day. Strong trading terminals like MT4 or MT5 can offer average execution speeds of a few seconds between the time the order was received and the trade was executed.
Both MT4 and MT5 offer a feature called one-click trading, where you can execute trades with just a single click, without having to enter any secondary information. It simplifies the process and reduces execution time, so that your trades are executed at the expected price or as close as possible to that price. Plus, they have multiple types of execution modes and orders to provide flexibility in price.
Smart Technical and Fundamental Analysis
Technical and fundamental analyses are vital to gauge the markets accurately and make informed decisions. Both MT4 and MT5 have varying categories of charting tools and technical indicators for traders to study currency price action and predict future trends. You can also set 30 in-built technical indicators in MT4, while MT5 provides 38. Plus, you get access to analytical objects and unlimited charts that can be opened at the same time, in multiple timeframes.
If you want to build your own technical indicator or buy custom ones built by other expert traders, you can do so through the MQL4 marketplace. Also, you can access plenty of forex signals to enter or exit positions. So, a good trading terminal allows comprehensive technical analysis to base your trading strategies on.
Now, currency rates depend on domestic economic health. MetaTrader 5 allows traders to set alerts for financial news or economic data releases. By staying updated with key economic performance indicators, you can estimate the direction of movement of a currency pair. These alerts are sent via an economic calendar. So, a single platform can take care of both fundamental and technical analysis and give traders flexibility of choice and market knowledge.
Risk Management Tools
Leveraged forex trading is risky, since any sudden volatility could result in magnified losses. This is why risk management tools are an essential part of every strategy. Trading terminals like MT4 and MT5 have many tools that can stop your trades immediately if the market takes a downward turn. This helps you salvage any profits you might have made and protect your account. Some of the orders include:
- Stop Loss
- Take Profit
- Stop Limits
- Guaranteed Stops
- Trailing stops
Each of these orders allow you to customise your risk management strategy in terms of price movements, profit limits and more. For instance, the trailing stop order allows you to move the stop order levels, when the market moves in the right direction unexpectedly. This way you don’t exit positions too early.
Perhaps one of the most significant advances in forex technology is the ability to access all features of these trading systems on multiple devices. Many platforms today, including MT4 and MT5, are operable across mobile devices and laptops, regardless of whether they are iOS, Android or Windows-based. This has enabled huge flexibility for traders to monitor their positions, make deposits and withdrawals, and conduct technical analysis to enter/exit positions from anywhere and at any time. All they need is a compatible device, login credentials and an internet connection. It is like carrying your trading account in your pocket. In the coming years, with the advent of 5G connectivity, trading could become much faster, providing high frequency traders a competitive advantage.
Depth of Market
Through trading terminals, you can see live streaming of market prices of all currency assets your broker provides. In MT5, the Depth of Market feature doesn’t just display the best bid/ask currency rates live, but also volume of buy/sell positions held at these prices. This allows you to track market sentiment and alter your strategies accordingly. You could also end up trading with the tightest spreads.
MetaTrader 4 and MetaTrader 5 allow you to access expert advisors or trading robots. These are automated trading tools that can enter and exit positions on your behalf, according to your instructions and can also stop trading when the markets go haywire. Along with this, you can also optimise these trading robots, based on past price data. This gives you a chance to judge the efficacy of these automated strategies, before deploying them in real market conditions. There is an in-built optimisation function too, which lets you arrive at the best trading parameters, which can help reach your goals.
These were just a few of the many benefits of efficient trading terminals like MT4 and MT5. There are plenty of other uses, such as customised email settings, customised profile settings, VPN access and chat functionalities with other traders, for an enriching trading experience. Before choosing a system, consider trading on a demo account first, to know whether the system suits your style and goals.