This is not investment advice. The information provided is for educational and informational purposes only and does not constitute a recommendation to buy or sell any financial product.
MetaTrader is a third-party trading platform produced by MetaQuotes, a software company based in Cyprus. The platform is licensed to brokers around the world, and the brokers customise the platform for their own product offering. The platform is the most widely used retail trading platform in the world, with millions of traders using it to trade FX, CFDs, and other derivatives. The platform is built for derivatives, not for direct stock trading, and the distinction matters for the trader's cost, the regulatory treatment, and the ownership of the underlying assets.
The two versions
MetaTrader 4 (MT4) was released in 2005, and it became the standard platform for retail FX trading. MetaTrader 5 (MT5) was released in 2010, and it added support for more asset classes, more order types, and a more modern codebase. The two versions are still in use, with MT4 more popular among FX traders and MT5 more popular among multi-asset traders. The choice between the two is mostly a function of the broker's offering, and most brokers offer both.
The two versions are not interchangeable. MT4 supports fewer order types and fewer time frames, but it has a larger library of custom indicators and expert advisors. MT5 supports more order types, more time frames, and a more modern economic calendar, but the custom indicator and EA library is smaller. The trader who is starting fresh can use either version, and the choice depends on the broker's offering.
The platform architecture
The platform is a client application that connects to a broker's server. The client is installed on the trader's computer (or run on the trader's mobile device), and the server is operated by the broker. The client sends the trader's orders to the server, the server routes the orders to the broker's liquidity providers, and the fills are returned to the client. The whole cycle takes milliseconds in a liquid market.
The client is a thin application, and most of the platform logic runs on the server. The server manages the trader's account, the order routing, the risk checks, and the historical data. The client provides the user interface, the chart, and the indicators. The architecture is reliable and fast, and the platform has been the standard for retail trading for nearly two decades.
How the platform relates to stock trading
The platform's primary market is FX, where traders buy and sell currency pairs. The platform's secondary market is CFDs, where traders buy and sell contracts that track the underlying asset. The CFD market includes CFDs on stocks, indices, commodities, and bonds. The platform does not support direct trading on a stock exchange, where the trader would own the shares and the shares would be held in a custody account.
A trader who uses MetaTrader to trade a US stock is trading a CFD on the US stock, not the US stock itself. The CFD is a contract with the broker, and the broker is the counterparty. The CFD pays the difference between the entry price and the exit price, plus any financing cost on overnight holds. The CFD does not give the trader ownership of the underlying shares, and the CFD does not give the trader the right to vote or the right to receive dividends in the same form as the underlying.
The distinction matters for several reasons. The first is the cost. A CFD on a US stock usually has a tighter spread than the underlying stock, but the CFD pays a financing cost on overnight holds, and the financing cost is a real drag on long-term holds. The second is the regulatory treatment. The CFD is regulated as a derivative, and the leverage cap and the margin policy are the rules for derivatives, not for stocks. The third is the ownership. The trader who holds a CFD does not own the underlying, and the trader cannot transfer the CFD to another broker.
The advantages of MetaTrader for stock trading
The platform has several advantages for traders who are happy to trade CFDs on stocks. The tight spreads are the first, and they are the result of the competition among MetaTrader brokers. The fast execution is the second, and it is the result of the platform's straight-through processing. The automated trading is the third, and it is the result of the platform's expert advisor framework. The deep library of indicators is the fourth, and it is the result of the platform's long history and active community.
The advantages are real, and the trader who is using a CFD strategy on stocks can benefit from them. The trader who is using a long-term buy-and-hold strategy on stocks is better served by a platform that supports direct stock trading, with the shares held in a custody account.
The limitations of MetaTrader for stock trading
The first limitation is the asset class. The platform is built for FX and CFD, and the platform is not a great fit for direct stock trading. The trader who wants to own the shares, with the right to vote and the right to receive dividends in the same form as the underlying, should use a different platform.
The second limitation is the regulatory treatment. The CFD is regulated as a derivative, and the leverage cap is the regulator's cap for retail traders on derivatives. The cap is often lower than the cap for direct stock trading, and the trader is exposed to the lower cap.
The third limitation is the data feed. The platform's data feed is provided by the broker, and the broker's data feed is not always the same as the exchange's data feed. The trader who is comparing MetaTrader's price to the exchange's price will see small differences, and the differences are usually a function of the broker's data feed.
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Where to start
If you are evaluating MetaTrader for stock trading, the most useful exercise is to fund a small account at a MetaTrader broker and to test the platform for a week. Our broker comparison lists the MetaTrader brokers that offer stock CFDs, the spreads, and the fee schedule, which together tell you what the cost and the workflow look like before you commit.