What is MT4?
MT4 is the acronym for MetaTrader4, the revolutionary platform that was developed by Metaquotes Inc. in 2005 for the trading of FX and CFDs. The platform was specifically developed for the retail end of the market, offering traders a simple trading platform which is easy-to-use and has a pleasant user interface (UI). The MT4 has gained massive popularity over the years. Indeed it has been so successful that its successor (MT5) has been unable to gain traction among traders.
An MT4 forex broker is principally a market maker/dealing broker that offers its clients access to place FX and CFD orders using the MT4 platform. Execution of these orders are performed in-house by the broker’s dealing desk department. The trader’s orders usually do not get to the interbank market.
- There is the originating point for all clients’ orders, and this is the MetaTrader4 platform. The front-end of this platform exists as a web-based platform, a desktop client and a mobile app.
- The back-end of the MT4 is fed to the execution venue, which happens to be a department within the brokerage firm known as the dealing desk. This is where all orders placed on the MT4 trading terminals arrive.
- The dealing desk department has a unit which hedges orders that poses large risk to the brokerage by passing them to the interbank market, and another unit which fills trade orders of clients directly. Pricing is derived by a mark-up from pricing obtained from the hedged trades with the liquidity providers in the interbank market. If the MT4 order can be filled at a price that will generate a small profit for the broker, the order gets filled.
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What are the Advantages of an MT4 Broker?
There are some advantages in trading FX with an MT4 broker. These are listed as follows:
- Provision of Liquidity
FX trading is a high liquidity market event. Pricing that emanates from the interbank market is done at wholesale level, which means that only bulk orders worth millions (and even billions) can be accepted by a major bank operating as a liquidity provider. A Standard Lot on the EUR/USD costs $100,000 to execute. Banks typically deal in orders worth hundreds and even thousands of Standard Lots. No retail trader has such individual trading capacity, except such a person was to be a George Soros or a Warren Buffett. This is where the role of MT4 brokers becomes virtually indispensable. They provide bridging liquidity by purchasing contracts wholesale from the liquidity providers, and reselling these at a mark-up and in smaller chunks to their retail clients. That way, a trader with even as low as $200 can still trade FX. - Lower Transaction Costs
Dealing desk brokers offer fixed spreads, and charge no commissions. This keeps the cost of trading lower than would be the case if an STP broker was used for such trading activity. - Instant Executions
Retail traders get instant executions for their trade orders, if they come in at a price that the broker can fill in-house. - Easy to Use Platform
Professional trading platforms are not suited for beginners as they are quite difficult to use. In contrast, the MT4 is very easy to use and is well suited for beginners.
Best 7 MT4 Forex Brokers 2019
Here is a list containing the best 7 MT4 forex brokers of 2019. This list presents MT4 brokers that have developed features that provide added benefit for their traders.
24Option
24Option was originally in the binary options market before it rebranded and shifted focus to the retail FX and CFD segment of the market. 24Option’s international brand is regulated by the IFSC in Belize (license no. IFSC/60/440/TS/18) while 24Option’s EU brand is regulated by CySEC (CIF registration number 207/13). Access to the FX and CFD market is via the desktop client of the MT4.
One advantage that traders who use 24Option’s MT4 have is that the get access to trade hundreds of stock CFD products, especially those from the US stock markets. If you love to trade the earnings season, then 24Option’s MT4 is the platform of choice.
Pros
- 24Option is a regulated brokerage.
- 24Option has comprehensive trader education for beginners and intermediate-level traders.
- Access to the Investors Compensation Fund (IFC) for 24Option’s EU traders.
- Access to trade some of the hottest US stocks as CFD products.
Cons
- Users of the international brand have no guaranteed balance protection.
- No trader insurance.
- Restrictive leverage on exotic FX pairs (1:10).
AvaTrade
AvaTrade used to be known as AvaFX, offering its traders a different kind of trading platform. But the company soon realized that there was no way it could compete with other brokers for market share by offering anything else than the MT4 platform. Today, the MT4 is part of the stable of platforms offered by AvaTrade.
AvaTrade has spreads its dragnet across the globe, offering users in selected countries the opportunity to trade on the MT4 using their local currency. This helps eliminate issues with restrictive payment methods and charges associated with sourcing for foreign currency.
Pros
- Avatrade is regulated in Australia, Ireland, South Africa and Japan, thus offering a regulated environmentt for tradrs in Asia, Africa and Europe.
- Unlike FxPro, Avatrade offers a comprehensive trader education suite.
- Various tools and add-ons such as Autochartist and a Trading Position Calculator for risk management.
- A calendar of earnings reports is available: a beneficial tool for stock CFD traders.
- Cryptocurrency CFDs are also provided for trading.
Cons
- AvaTrade’s MT4 tends to have many requotes.
- No negative balance protection for traders outside the EU.
- Slippage is also common.
Forex.com
The Forex.com brand is owned by GAIN Global Markets Inc, a member of the GAIN Capital Holdings Inc. The brand is regulated and authorized by the Cayman Islands Monetary Authority with license number 25033. The Forex.com brand has one of the truly spectacular versions of the MT4. This brand was one of the first to offer traders the opportunity to get live trade calls on the News tab of the MT4 terminal window, as far back as 2008. This practice continues to this day, with input from Trading Central.
As the largest MT4 broker in the world, Forex.com provides an MT4 platform that is suitable for news trading. This comes as a result of the integration between market news from Reuters and research done by the in-house team. Traders also enjoy cashbacks on their trades, with up to 15% cashback on monthly trade volume put on offer to all clients.
Pros
- Forex.com is a recognized brand in the forex arena.
- MT4 offers leverage of up to 1:500.
- Free forex VPS hosting.
- Earn 1.5% interest on your daily account margin.
- No bank fees on wire transfers.
Cons
- Its regulatory status is from a jurisdiction regarded as weak on trader protection.
- No negative balance protection
FXTM
FXTM (also known as ForexTime), has recently undergone some ownership changes. Its international brand, which used to be run by FT Global Limited, was recently sold to Exinity Limited. However, the brands operated in the UK and EU remain under the existing management. FXTM is an MT4 broker which is regulated and licensed to operate in several jurisdictions. FXTM is licensed in Cyprus (EU) with CySEC license number 185/12. It is also regulated in the UK (FCA number 777911) and in Mauritius (International brand) by the FSC with reg. no C113012295.
FXTM offers the MT4 as a desktop client, a generic mobile app. The FXTM MT4 allows for partial order filling and allows the trader to hold multiple positions on the same asset. The Strategy Tester allows for multi-threaded, multi-currency testing, using real ticks. The FXTM MT4 also features an economic news calendar.
Pros
- FXTM is regulated in at least three jurisdictions.
- Traders with FXTM have access to the Financial Services Compensation Fund (trader insurance worth £50,000) and a similar insurance fund in the EU.
- Opportunity for profitable traders to work as Strategy Managers, and receive 20% of subscription fees as compensation.
- Regional offices allow citizens of certain countries to trade in their local currencies, which saves on exchange fees and bank wire charges.
- FXTM has a very solid trader education structure, provided via offline seminars, webinars and online content.
Cons
- Leverage is restrictive (1:30) for the UK and EU brands.
- Not all assets are traded within a single version of the MT4.
- FXTM does not provide services to citizens of at least 12 countries.
- International brand does not offer negative balance protection.
City Index
City Index is the UK offering of GAIN Capital LLC. City Index offers market making brokerage services, and delivers its market access using its own version of the MT4 platform. GAIN Capital is the world’s largest MT4 brokerage brand, and in the UK, allows for delivery of trading access under the new rules set out by the European Securities and Markets Authority (ESMA). City Index delivers the MT4 platform as a desktop clients and a mobile app (available on Google Play and App Store).
City Index’s MT4 presents a customizable economic calendar which allows the trader focus only on the news trades of interest. Traders can also use multiple order types to setup trades, use trailing stops to lock in profits in active positions, and scale out of trades using partial, incremental manual closing of positions. City Index is regulated by the Financial Conduct Authority (FCA) with license number 113942.
Pros
- FCA-regulated brokerage and technology provider.
- Traders have access to the FSCS, which provides trader insurance worth £50,000.
- Traders have negative balance protection.
- City Index also features the well-acclaimed GAIN Affiliates program.
- The City Index MT4 provides access to the MQL Community, where a robust marketplace allows traders to purchase custom indicators, EAs, strategies and scripts.
Cons
- Leverage is restrictive and maxes out at 1:30.
- Trader education is a bit scanty on City Index.
- Requotes and slippage are common on the MT4 platform.
XM
XM is owned by Trading Point Ltd, and offers the trading of forex via the MT4 in all the jurisdictions in which it is regulated. Trades can trade more than 8000 assets using 8 versions of the MT4 (Webtrader, desktop clients for PC and Mac, iOS devices, Android smartphones and tablets as well as a Multiterminal). XM is regulated in the UK by the FCA (number 705428), in Australia by ASIC with AFSL 443670 and in the EU by CySEC (license number 120/10). The international brand is offered via XM Belize, licensed by the IFSC with license number 60/354/TS/18).
The XM MT4 platform offers database management, with an in-built ability to perform historic data import/export functions. Over 50 technical indicators and tools are available for analysis, and the 1-click trading function is enabled. The MT4 also permits use of EAs and custom indicators, as well as the ability to customize charts using scripts. Access to the MQL Community Marketplace is also guaranteed. An internal mailing system which allows XM communicate with clients right in the platform’s terminal window completes a great MT4 offering.
Pros
- XM is a regulated brokerage.
- Provides an MT4 Multi-terminal for traders who manage multiple accounts.
- Access to the MQL Marketplace.
- Trader insurance worth £50,000 is provided via membership of FSCS for XM UK and access to the Investor Compensation Fund (ICF) is also available for clients who trade with XM Cyprus.
- Good trader education and market research tools.
Cons
- Leverage is restrictive (1:30) for clients of XM Cyprus and XM UK.
- Slippage and requotes do occur occasionally.
- Traders with XM’s international brand have no access to investor protection insurance and no negative balance protection.
FxPro
FxPro came into the market in 2006, after the acquisition of Northfinance. In the last 15 years, FxPro has grown to emerge one of the strongest MT4 brokers in the market. FxPro is licensed in several jurisdictions. In the UK, it is licensed by the Financial Conduct Authority (FCA) with registration number 509956. FxPro is also licensed in the EU (Cyprus), with license number 078/07, as well as in the MENA region by the Dubai Financial Services Authority with reference number F003333.
FxPro also maintains an offshore division which handles clients that are unable to meet the new ESMA margin requirements. Existing clients are migrated seamlessly with a touch of the mouse button. FxPro has one of the best MT4 execution engines in the game, with less than 1.38% of all market orders experiencing requotes. 12.81% of clients experienced slippage, which ended up being favourable as the offered prices turned out to be better than the original prices. FxPro’s MT4 also features a very broad asset list which ensures that traders will always have markets that they can trade. The company’s order matching engines are located at the FxPro LD5 London or Amsterdam data centre.
Pros
- FxPro is a multi-regulated brokerage.
- Trade with leverage of 1:30 at the EU/UK venues, or trade at leverage of up to 1:500 at the offshore branch regulated by the SCB.
- Fast executions due to its order matching at Equinix LD5 London data centre.
- The lowest requote rate in the MT4 retail market.
- Opportunity to use several add-ons on the FxPro MT4.
Cons
- Lack of a dedicated trader education suite.
- No negative balance protection for offshore offering.
- Website has gotten more complex over the years, making it more difficult to use.
Mode of Operation of MT4 Brokers
MT4 brokers typically operate a dealing desk department, which takes on the risk of trades from its clients either by directly absorbing these trades, or by taking a counterparty position (i.e. taking the opposite sides of these trades). The 2nd component of the operation has come under some criticism for presenting a conflict of interest. However, some MT4 brokers have stopped taking counterparty risks and instead, simply resell positions that have been hedged or acquired at the interbank market. The snapshot below shows how the process works.
A practical demonstration of how MT4 brokers handle orders is shown below, and an example is shown below, using two traders that want to go long on the GBP/USD.
- Two traders BUY the GBP/USD at 1.2976 and 1.2970 respectively. These trades can be handled in two ways:
METHOD 1
- If the traders’ positions are small, the MT4 broker will look at the price at which the GBP/USD contract was obtained from the interbank market. Assuming the MT4 broker obtained the GBP/USD from the interbank market at a price of 1.2974, Trader A’s offer to purchase the GBP/USD at 1.2976 will be fulfilled, while Trader B’s order to purchase at 1.2970 will be rejected, and Trader B will be asked to requote. This is because the MT4 broker will make a profit from Trader A’s price offer, but not Trader B’s price offer. When the market is volatile and prices are changing too quickly, this can be the case.
- If the positions of one or both traders are very large, typically going into millions of dollars, the MT4 broker will typically refuse to take on the risk for such trades, and will pass these on to another execution venue (either a prime broker or the interbank market).
METHOD 2
- The MT4 broker will look at the trading history of both traders. Let us assume Trader A has a history of making profits, while Trader B tends to lose money in trades. What happens?
- The MT4 broker will usually choose to hedge Trader A’s trades by passing them on to a different execution venue. Trader A will be placed in what is known as the “A” Book liquidity bucket.
- The MT4 broker will place Trader B in the “B” book liquidity bucket. More often than not, the broker will opt to be the counterparty to Trader B’s trades. This model has come under criticism and some brokers have started to walk away from this approach. FxPro and FXCM have now instituted mechanisms to reduce the level of counterparty risks assumed by their in-house systems.
In essence, the MT4 broker is likely to absorb your trade orders in-house if it is small, but will likely send these to an external execution venue if they are large in an attempt to hedge their risk.
Conclusion
This has been a compilation of our Best 7 MT4 UK Forex Brokers for 2019. With this list, you can be sure to get brokers who can deliver the best that the MT4 has to offer.
FAQs
MT4 brokers operate in the retail end of the market. They provide liquidity by mopping up positions from the interbank market, and reselling these in smaller quantities to their clients. These transactions are done in a department of the brokerage known as the dealing desk. This is why MT4 brokers are in essence, dealing desk brokers.
MT4 brokers charge fixed spreads, and typically do not charge commissions on trades (with the exception of very volatile CFD assets). So in terms of charges and expense, it is cheaper to trade with MT4 brokers than it is to trade with STP brokers.
Contrary to the erroneous belief that this is a desk on which some kind of a “Big Brother” entity sits to watch your every trading move, a dealing desk is not a single desk at all but is actually an entire unit in a brokerage firm made up of several dealers, sometimes numbering up to 50. The dealing desk unit is actually the operational unit of a brokerage, which takes in trades from clients for in-house execution, or passes same to an external execution venue to hedge the risk from large orders.
The spreads on an MT4 brokerage are constant and do not change when there is market volatility. However, these may widen under extremely volatile conditions to produce a phenomenon known as slippage.
The MT4 platform is loaded with charts and all kinds of tools that are commonly used for technical analysis. Some MT4 brokers also offer their clients access to a technical analysis service from Trading Central.
MT4 stands for ‘MetaTrader4’; a platform developed as a turnkey, customizable trading client that can be offered by retail brokers to their clients.
The MT4 platform is suitably built for use with a forex Virtual Private Server (VPS). Some MT4 brokers also provide free access to a forex VPS for traders who have funded live accounts.
Are MT4 brokers dealing desk brokers?
How expensive is it to trade with an MT4 broker?
What is a dealing desk?
Are the spreads on an MT4 platform fixed?
Can I perform technical analysis using the MT4 platform?
What does MT4 stand for?
Can I use my forex VPS on my MT4 broker?
