The most popular Forex trading platform among retail traders, the Metatrader 4 has some fantastic features. A beginner’ guide to retail FX trade must start with understanding the Metatrader 4 platform.
A Forex platform has the capability of bringing traders together. Those aren’t just big words. That’s reality.
The Metatrader 4 is so popular because of its simplicity. And, because it fits a retail trader’s needs like no other.
Brokers around the world embraced it. Nowadays, only some big houses that cater to other groups too have an in-house developed platform.
And, even those brokerage houses offer the possibility to use the Metatrader platform. Or, at least to integrate it with their own platform’s features.
The thing is that if a broker doesn’t offer the Metatrader 4, it starts on the wrong foot. It’ll have a difficult time attracting retail capital.
This article aims to provide a beginner’s guide to the power of the Metatrader 4 platform. We’ll cover topics like:
- Why it is the best Forex trading platform
- The ease to open a Forex demo account
- Automated trading with Metatrader 4
- How to customize a chart
- How to import an indicator
- Profiles and templates
- Shortcuts to make a trader’s live easier
- Types of orders provided
- Margin and how to interpret it
- Leverage in a trading account
- The elements of a Metatrader4 trading account
- How to use the strategy tester
Moreover, we’ll check why the platform isn’t used in some parts of the world. And, what traders do to avoid those limitations.
At the end of this article, you’ll find this beginner’s guide useful for all kinds of traders. It so happens as even those with plenty of experience still have lots to learn.
Forex Trading with Metatrader 4
Any beginner’s guide to Metatrader 4 starts with understanding Forex trading. Forex comes from foreign exchange.
This is the most liquid and largest market in the world. Players of all types exchange hands for various reasons.
Some look to profit from currencies’ fluctuation. So-called traders, they buy and sell in the hope prices will rise or fall.
Some others merely execute a mandate. For instance, in the case of a cross-border merger or acquisition, the buyer pays for the goods in the seller’s currency.
Hence, the buyer sells its currency in exchange for the other one.
Finally, there are commercial and central banks.
Commercial banks execute clients’ order. When you change a hundred Euro in USD or the other way around, you instruct your bank to make the exchange. That happens in the same arena: foreign exchange.
Central banks, on the other hand, play with a different purpose in mind. Aiming for price stability and targeting inflation, they stir the monetary policy to stimulate economic growth.
Setting monetary policy is one thing. Implementing the changes is another.
Hence, there are trading departments in charge of implementing the measures.
When central banks buy bonds under quantitative easing programs, who’s doing the buying? Effectively? The central banks via their trading desks.
These players or market participants act as buyers and sellers on the same market. Also called the interbank market, it became available to retail traders only recently.
More precisely, a bit more than a decade ago, brokers spotted the opportunity of the online environment brings to trading. From this to online trading was only a small step forward.
With the help of leverage, any retail trader buys and sells directly on the interbank market. Only about ten or more years ago this was a dream. Today, it is a reality.
Beginner’s Guide to the Trading Platform
Before traders open a Forex account with a Forex broker, they check the offering. Account types, regulation, trading conditions, and trading platforms, mobile trading availability, are only a few elements.
The Metatrader 4 is the first choice as a trading platform. And, for good reasons.
One is that almost every retail foreign exchange speculative trader knows it. And, even if not, the majority of indicators to find for free on the Internet belong to the Metatrader 4 platform.
Plus, most trading strategies explained over the Internet use the Metatrader 4. But what is this platform?
Is there a beginner’s guide to using it?
Metatrader 4 – A MetaQuotes Software Product
Launched in 2005, the Forex metatrader platform belongs to the MetaQuotes Software company. It company licenses the software to Forex brokers. Brokers, in turn, provide it to the clients that open a Forex account.
It comes with two sequences: one for the broker and one for the actual traders. The server component belongs to the broker, naturally.
Traders use the platform to monitor live prices, buy and sell at market or use pending orders, and so on. The ease of opening a demo Forex account makes the platform the first choice among traders.
All you need is an email address, fill in some personal data, download the software, and off you go.
A demo account mimics a live one. However, before traders open Forex account and fund it, a demo one serves its purpose. It helps traders learning the features.
The Metatrader 4 or the MT4 is a version that followed other attempts by the same company to build a performant trading platform. Despite the developing of the MT5, the Metatrader 4 remains the number one choice. We’ll explain later why.
Because brokers don’t need to invest anything in the Metatrader 4 as they just license it, it is the first choice for them too. Moreover, the MetaQuotes company offers each broker the opportunity to brand the platform.
Beginner’s Guide to a Trading Account Opening
Firstly, the trader must choose the Forex broker. There are so many of them competing for the same traders, that it’s impossible not to find one.
Usually, the one that advertises the most isn’t the best pick. In any case, traders make sure to check the following:
- regulation – when the broker complies with the rules established by a financial authority, the broker’s and trader’s interests align
- funds segregation – the broker can’t use the funds in the day-to-day activities
- trading accounts – types of accounts offered – the more, the better
- server time – where are the servers – time zone and implications for the Metatrader 4
- minimum trading conditions – minimum funds to deposit, minimum and maximum leverage
- offering – nowadays currency pairs are only one part of a broker’s offering – the more, the better
- technology – STP (Straight Through Processing) or ECN (Electronic Communication Network)
Secondly, the account opening process continues with downloading the Metatrader 4 platform. The software promptly asks for the login data, and off you go to the interbank market.
The first impact on novice retail traders is that this is a video game. All the numbers changing values, sometimes faster, sometimes slower, give the impression that this is a game.
It may be one, but an expensive one to find out how it works if unprepared for it.
Customizing a Chart in Metatrader 4
One of the benefits a trading platform brings is that traders can use technical analysis. That is the number of trading tools, indicators (oscillators and trend ones), trading theories, that helps to forecast future prices.
For that, traders open one or more charts corresponding to one or more currency pairs. Initially, a chart looks like this:
However, with a simple right-click the Metatrader 4 platform allows traders to customize it any way they like. Just choose from the Properties, and by changing the colors and settings it may look like the example below, helping one to analyze a currency pair:
Traders can write on a chart, draw lines, channels, use Fibonacci, change colors, etc. Simply put, there’s no limitation to the degree one can customize a Metatrader 4 chart.
Importing a Custom Indicator
The trading platform comes with default indicators. Some oscillators, some trend indicators, basically the standard offering is there for the retail trader.
However, technical analysis evolved and changes all the time. New ideas, new strategies, and new indicators appear. Custom ones.
How to use them on your trading platform? Nothing more natural: import them.
The Metatrader 4, like any software, exists somewhere on the PC (Personal Computer). By using the “Open data folder” option from the File tab in the main menu, traders easily find the trading platform’s location.
Just place the new indicator in the Indicators tab, close the Metatrader 4 for the changes to take place, open it again, and the indicator is there to use under the Custom Indicators tab.
The same process works when importing an Expert Advisor, for example.
Automated Trading with Metatrader 4
Speaking of an Expert Advisor, this is a robot or a computer program. Also called a trading algorithm, or merely a bot, it buys and sells according to instructions.
Any beginner’s guide to the MT4 platform must talk about auto-trading.
The Metatrader 4 was one of the first platforms to give retail traders the possibility to run automated trading. It became so popular that today’s trading is over eighty percent automated.
The Auto Trading option available on the Metatrader 4 offers automated trading with a simple click. First, traders upload the Expert Advisor.
By the way, to build one, the platform offers the MetaQuotes Language Editor (under the Tools option in the main menu). This unique program gives traders the possibility to code their own strategy and wrap it up into a robot. Or, indicator.
Second, traders use the Strategy Tester. This tool tests the strategy on historical prices.
After all, it is essential to check the chances of any trading strategy to make money in the future. How come?
Because trading is a game of probabilities, chances are it’ll make money if it did so in the past. Instead of using manual testing, the tester does that very fast, providing a clear statement of past performance.
Types of Trading Orders
Trading orders belong to automated trading too. All traders know that having a stop loss is mandatory. It helps contain the risk in a trading account.
Also, a take profit defines the reward. Or, the target.
Hence, after buying or selling a currency pair, the stop loss and the take profit levels contain the price action. Once the price reaches them, the Metatrader 4 executes them automatically.
This beginners guide to Metatrader 4 can’t skip the ways to place a trade. This is done either:
- at the market – traders buy or sell at current prices, with the Metatrader 4 executing the order right away
- using a pending buy stop order – buying takes place from higher prices than the current ones
- using a pending sell stop order – selling takes place only if the price reaches lower levels than the current ones
- placing a pending buy limit order – buying takes place only when and if the price falls first to the desired entry level
- placing a pending sell limit order – selling takes place from higher prices
What Makes a Trading Account?
More precisely, we should ask what is Forex through the eyes of a trading platform? That is, we must understand a trading account’s elements.
Balance is the first. When traders deposit funds, this is where it goes. In the balance, which will stay unchanged until a trade is open.
A beginner’s guide through the elements of a trading account starts with the balance and ends with the leverage. And, margin.
Moreover, in the middle, the equity of an account plays the leading role. It shows the true value of a trading account at any moment in time.
For this reason, the balance misleads traders. Traders should focus on the equity in the Metatrader 4 account, rather than on balance.
Furthermore, the leverage dictates the margin available and the percentage required for a trade. One separate warning here should make traders aware than the margin differs for various currency pairs. Namely, trading some pairs requires more margin than others. For instance, the NZD (New Zealand Dollar) pairs block less margin than Euro one.
Tips and Tricks When Using the Metatrader 4 Platform
The Metatrader 4 has so many features it is impossible to cover them all in this article. Instead, we emphasized the most important ones.
However, there are still some tips and tricks to use when trading with the Metatrader 4, like:
- save templates – after customizing a chart, editing indicators, building a strategy, right click on it, and choose the option to save the template. From that moment on, on any new chart, just load the template, and the setup appears instantly.
- use profiles – the platform comes with the default profile, but traders can change the name, and save as many profiles as intended. What is this good for? Well, one minor thing comes to mind: when changing the broker, just copy the profile and upload it into the new broker’s Metatrader 4 It’ll spare you of plenty of extra work.
- under the Tools and Options tab from the main menu, make sure you choose the “Select object by single mouse click.” This small trick will save you one click every time selecting an object, which will get you a long way on the day-to-day use of the Metatrader 4
- use the CTRL + click option to copy any object on the Metatrader 4. Again, it’ll spare a lot of time when using the platform extensively.
Metatrader 4 Limitations
In some parts of the world, the financial authorities imposed strict regulations to protect the retail trader further. The best example comes from the United States.
The SEC (Security and Exchange Commission) imposed a FIFO (First In First Out) order for all trades. And, it banned hedging.
Instead of adapting the Metatrader 4 to the new U.S. requirements, a new version appeared. The MT5.
The two are the main differences between the platforms, and anything else is pretty much similar.
For a beginner’s guide for using the Metatrader 4 platform, this one turned out to be quite complete. It covers everything a trader needs to know, from the opening of a Forex account to the actual trading.
Still, there’s more to add. Every function mentioned here has more to it than what we’ve covered.
For instance, the automated trading with Expert Advisors needs further explanations. Traders face numerous challenges when placing and trading with a robot.
However, they aren’t necessarily Metatrader 4 related. Instead, traders need to know they can address them from inside the platform.
Again, this beginner’s guide aimed at showing the importance of the Metatrader 4 platform in today’s online retail trading. No other trading platform offers such versatility and functionality like it today.
Perhaps the future will see a new platform rising to challenge the Metatrader 4’s dominance. Until then, this beginner’s guide meant to ignite curiosity in the retail Forex traders in start searching for the features mentioned.
In time, you’ll find out that all the other available trading platforms got inspired from the Metatrader 4. And, for a good reason, as it represents a benchmark in the industry.