Is MetaTrader 4 a Broker?
For traders relatively new to trading, it is easy to get overwhelmed with a wide variety of new terminologies. It is very understandable if you are overwhelmed with so many unanswered questions. Okay, so you have heard of MetaTrader 4 and also know that you need a broker to place a trade. You may be wondering if Metatrader 4 is a broker in itself. To clear all confusion, you should know that Metatrader 4 is not a broker but a third-party trading platform.
You can not use the MetaTrader 4 trading platform without attaching it to a broker. Also, there are a number of brokers that easily integrate with MetaTrader 4 as a trading platform. On the other hand, there are some brokers that do not allow MetaTrader 4 as a trading platform but use other third-party trading platforms or their own custom-made trading platforms.
Now, Let us go deeper into the functions, and interrelation between Metatrader 4 and a broker.
Functions of MetaTrader 4 (MT4)
Most traders place their trades using a trading platform. A trading platform is simply that piece of software or app that you log in to every time you want to analyze a financial instrument price chart or open/close a trade. MetaTrader 4 is a very popular trading platform developed by a company called Metaquotes in 2005. Metatrader 4 can be used to trade a wide range of financial instruments including forex, cryptocurrencies, indices, and commodities. This popular trading platform can be used by traders with different trading styles ranging from scalping, day-trading, swing trading, and even algorithmic trading.
MT4 is highly customizable and you can even automatically copy your trades from your main trading account to a second trading account. This is particularly useful if you use two or more MT4 brokers and do not wish to manually copy your trades from one account to the other. You can find a ton of technical indicators that might be useful to your trading strategy. You can even import your own indicator if you wish. Metatrader 4 is a popular trading platform that is used by both technical and fundamental analysis traders.
On the MT4 platform, you can place both market orders and pending orders. A market order is when you immediately open a buy or sell trade while you are physically present in the trading platform. While a pending order is a trade you initiate that will open when the financial instrument gets to a future price. When this pending order opens at the future price you set, it becomes a market order.
Functions of a Broker
A broker provides traders with a platform for buying and selling financial instruments like forex, commodities, cryptocurrencies, stocks, metals, and indices. The broker serves as an intermediary between the retail trader and a securities exchange. There is a need for an intermediary because to place an order with a securities exchange, a trader must be a member of that exchange or trade through members. So, if for any reason you choose not to use a broker you may need to become a member of a securities exchange for your trading orders to be processed.
Another advantage of trading through brokers is that most brokers give retail traders the ability to place large trades in the financial markets with the deposit of small trading capital. This is through the provision of leverage. Professional retail traders use leverage to make decent profits. They use the broker’s capital to place large trades while only depositing a small trading capital with the broker as a form of collateral. Though most brokers set a limit to leverage, this maximum leverage is usually sufficient to make decent profits from the financial markets in the long run.
Trading brokers need a way to make money to sustain their businesses, hence, most times it is not completely free to use a broker. A broker may charge you trading costs like spreads, commissions, and swaps. Most of the time, these trading costs are small and quite affordable especially if you are using one of the top brokers.
The Relationship between Metatrader 4 and a Broker
As stated earlier, you can not use MetaTrader 4 without attaching the trading platform to a broker of your choice. Also, MetaTrader 4 is completely different from your broker. MetaTrader 4 is a trading platform and not a broker. In simple terms, a broker is an intermediary between you as a trader and a securities exchange that will process your trading orders. When deciding on the broker you wish to trade with, you will also need to choose which trading platform you are most comfortable with.
As a trader, you will most likely choose the trading platform you’ve been using to trade in the past or the one your trading mentor(s) taught you with. If the best broker in your country does not support MetaTrader 4 for the specific financial instruments you are interested in trading, you may have to use other trading platforms available with your chosen broker. Some top brokers that easily integrate with MetaTrader 4 are Exness, FP markets, AvaTrade, Forex.com, Oanda, Libertex, and XM.com. On the other hand, top brokers like eToro and IQ Option do not allow MetaTrader 4 as a trading platform.
Conclusion- Is Metatrader 4 a broker?
MetaTrader 4 is not a broker. It is a third-party trading platform that integrates with brokers. It is a fascinating software that traders use to perform all sorts of trading-related activities like monitoring live prices, open/close trades, technical analysis, and algorithmic trading among others.
Though MetaTrader 4 is a great trading platform, it is completely okay to use other trading platforms like trading view or MetaTrader 5, or even a top broker’s trading platform. After all, the point of a trading platform is to help analyze, open and close trades in the easiest and fastest possible way. We believe this blog article cleared all confusion you may have about if MetaTrader 4 is a broker or not.