The introduction of the trading platform MetaTrader 4 in 2005 revolutionised FX trading for non-institutional investors, as it structured the chaos of different system and applications existing until then. MetaTrader 4 is not only a trading platform, but also comprises a powerful individually configurable charting tool and the built-in programming language MQL4.
MetaTrader 4 can be obtained directly from the softwaredeveloper MetaQuotes However, the program may be downloaded from the website of the broker to be used for the trading account, thus benefiting from pre-configured currency pairs, IP addresses and other parameters. As MetaTrader 4 receives the exchange rate information from the FX broker in real time, a permanent internet connection is required. When using MetaTrader 4 for regular purposes, normal hardware will be sufficient, but an increased computing power is needed for the backtesting of complex trading strategies.
When using the software package for the first time, a demo account can usually be opened with the FX broker, a few brokers may ask for a registration and account opening on their website beforehand.
Charts can be produced for all tradable items of the broker, their chart type, colours and similar can be configured at the user's discretion. Also indicators can be added as desired, a variety of well-known indicators is already pre-installed. The user is able to modify the indicators using MetaTrader's 4 inherent programming language MQL4 which also allows the generation of own indicators.
Below an example of a standard chart EUR/USD with moving averages and MACD ...
... and of the commercially available manual trading strategy ProFx, which produces and displays trading signals through charts.
Trading types available in MetaTrader 4 depend primarily on the FX broker and/or the type of account. Nevertheless, instant execution orders and pending orders should be available as a minimum. When placing an order, take profit and stop limit information can be entered in addition to the ticket size.
The instant execution order fulfilled immediately at the next available rate will cater for the capture of a maximum deviation (slippage) from the current rate the customer would be ready to accept. In case that a value is not put in and an order execution at a rate valid at the time of the order placement is not possible, the client will receive a requote from the server of the FX broker which means that he will be offered an execution of the order at a new rate. The user may want to accept limited rate deviations beforehand, in particular during periods of volatile trading when rates fluctuate heavily within seconds, so that the likelihood of an order execution will be increased.
A pending order will be converted into an instant execution order only when a certain rate level is exceeded (sell limit, buy stop) or the rate falls below a certain level (buy limit, sell stop), in this case the order will be executed at the next available rate.
MetaTrader 4 comes with the programming language MQL4 which allows the user the generation of personal indicators as well as the automation of certain tasks like the creation of trading signals or the order execution itself. Such programmes are called Expert Advisor or shortly EA.
Basically all users can develop their own Expert Advisors which will trade according to the programmed trading strategy. Expert Advisors can be very simple trading systems or complex strategies like neuronal networks and genetic algorithms.
The use of Expert Advisors comes along with a number of advantages. EAs can monitor the market around the clock and react to specific market situation without the trader's permanent presence. Since FX markets are active for 24 hours on business days, this allows the benefit from all trading opportunities in the market. Additionally, there is no limit to the number of currency pairs and markets to be monitored simultaneously.
Expert Advisors also permit the concurrent use of several trading strategies for further risk diversification.
However, the crucial advantage is that Expert Advisors do not know any human emotions like fear or greed, and they will pursue a strategy without personal involvement, without panicking or increasing the risk. It remains at the user's discretion to select the suitable Expert Advisors and to define the correct trading parameters.
To make most use of the Expert Advisor's potential to trade around the clock, a stable online connection with the broker is required, and the application must be running permanently, this needs - at least in the long-term - some work to be done. An accidental closing of MetaTrader 4, an automatic restart of the computer after a Windows update or a simple computer crash may lead to a number of problems, like positions cannot be opened any longer and open positions may not be monitored and therefore cannot be closed.
If you are not fortunate enough to have your own server or if you do not want to put one up in your living room, then you can resort to a Virtual Private Server (VPS). A VPS can be compared with a flat share. For the support of his own applications, each client has the right to a proportional use of the different resources (processing power, working memory, hard disk) of a server operated by a data center. The communication will be carried out using the remote desktop connection as offered by Windows.
The MetraTrader 4 will be running on Linux only with lots of patchwork, which unfortunately means that expensive Windows servers have to be used. Be cautious of cheap bargains, although offers for 20 EUR/month should be easily available. Some providers, e.g. Commercial Network Services, are focusing on server services relating to FX trading and MetaTrader 4. This offers the advantage of pre-installed services and applications, suitable support for the installation of MetaTRader 4 and partially also pre-configured EAs. In addition, these suppliers will also adapt their maintenance to the requirements of the FX market, while ordinary providers prefer to update their systems at 11 pm which coincides with the start of the Asian session.
Forex brokers are another option for access to VPS - partially also at no fee. Some brokers, for example I am FX, offer free VPS when opening a live account or depositing a minimum payment. You may go for this option if you are ready to commit yourself to a broker. But most probably the costs for the free VPS will be hidden in the spreads.
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