The MT4 or MetaTrader 4 is an online trading platform for traders who speculate on the foreign exchange market.
Its initial release was 15 years ago, but today, it stands at the most commonly used software for trading. It had undergone improvements throughout the years and is available on mobile as well.
But for those who are not familiar with the MT4 and are getting into trading for the first time, this article will be your guide.
This post is a bit lengthy so it's recommended that you bookmark this page.
Nonetheless, this covers a comprehensive guide that will teach how to use MetaTrader 4.
The first step that you need to do to get started is to download the MetaTrader platform, and there are two ways for you to do this:
- Find a broker who will offer you access to the MT4 software
- Download directly from the MT4 website.
Cleaning up the chart
If you're comfortable with the default settings of your chart, then you can leave it as it is, but if you want to make some tweaks to clean up the chart, here are the steps you can follow:
1. First, maximize any of the charts from the four ones that appear on a fresh install.
2. Once the chart window is enlarged, right-click on the chart and click on Properties — alternatively, press F8 from your keyboard.
3. If the chart you selected is displaying a bar chart or a line chart, you can change this to a candlestick chart by clicking "candlesticks" (as shown below). You can also do this by clicking on the candlestick chart icon from the toolbar or press Alt+2.
4. Next, you can remove the grid of the chart in the SHOW tab to clear up some space, especially if you're going to be drawing objects or lines.
5. Then, switch over the COLORS tab and make these changes: change the candle up and bull candle to green or blue and change the candle down and bear candle color to red. Click OK.
6. Finally, remove the indicators by right-clicking the chart again, then go to the Indicator List, select the indicator you want to remove, and then click Delete.
7. Now, to make the process easier next time, you can save this as a template. Again, right-click on the chart, hover to Templates, and click Save Template and set a name for it. With the other charts that you want the same clean look, you can simply load up the template.
Watch a demonstration of the steps above by viewing the video below:
Selecting the currency pair to trade
- To pick the currency pair you wish to trade, look over the panel located on the left side of your chart. There you will find a list of currency pairs and other tradable instruments, which is called the Market Watch. The keyboard shortcut for this is Ctrl + M.
- Once you've selected a currency pair, click and drag it over to your chart window, and it will display the entire price action for that currency pair.
Selecting more than one currency pair
- If you plan on trading more than one currency pair, you can minimize the chart you're currently working on and then click and drag the currency pair outside of the chart window.
- If you can't find the product that you want to trade, right-click on the Market Watch window and click Symbols or press Ctrl + U.
- Select the group where it falls under. For example, if it's Forex and you wish to trade an exotic currency pair like the US dollar and Turkish Lira pair, search for the description or symbol and double click it until the dollar symbol on the left turns yellow. Press OK.
Organizing the chart
Now, it may look cluttered to have all those charts overlapping each other, so as a remedy to this, click on the "Arrange windows as non-overlapping tiles" button or press Alt + R.
What you will see is like the image below.
Forex Tester 4
One of the best ways to learn trading is to use a backtesting software. Read our review.
Placing an Order
There are three ways for you to place a trade order:
1. Use the trade panel -The trade panel, by default, appears on the upper left corner of your charts, where you'll see two price quotes with either a BUY or SELL label on the top.
This is the quickest way for you to place a trade.
Once you set a lot size and click either BUY or SELL, a window will pop up informing you if you'd like to opt-in for "one-click trading."
You can agree to this if you want a quicker way to transact. To hide/unhide the trade panel, press Alt + T.
2. Right-click on the chart - Another way for you to place a trade is to right-click on the chart, hover to Trading, and select New Order.
3. Use the F9 key/ Click the Toolbar icon- There's an icon you can click on the toolbar that will take you to the order window, or you can simply press the F9 key.
Types of Order
For this part, you'll learn the types of orders that you can place on the MetaTrader platform.
- BUY LIMIT is a pending order you can place at a price that's lower than the current market price. Typically, you set this order when you expect the market to bounce back up from the price level you set.
- BUY STOP is a pending order you can place at a price that's higher than the current market price. You can place this type of order if you think that the current trading price is going to continue to go up.
- SELL LIMIT is a pending order you can place at a price that's higher than the current market price. Using a sell limit means that you expect the price to reverse after hitting the price you set.
- SELL STOP is a pending order you can place that's lower than the current market price. You use a sell stop if you believe that the current trading price is poised to head lower.
Take Profit and Stop Loss
Take Profit and Stop-Loss are orders that you can use to modify your trade so that it automatically closes once it reaches a certain price.
For example, you set a take profit order at 1.1900 for your EUR/USD BUY trade that you opened at a market price of 1.1877.
When the price goes up to 1.1900 eventually, your trade will automatically close, pocketing you a profit of 23 pips.
The same mechanics apply to Stop-Loss. So, if instead of going up, the price went down and hit your Stop-Loss set at 1.1857, then what happens is you'll walk away with a loss that isn't more than 20 pips.
So, even if you sleep or step away from the device you use for trading, you can make guarantee that there are orders in place to cap off your trade at a fewer loss or at a profit as opposed to leaving it exposed in the market.
If you don't know what pips are and these other terms for money management, read this.
If you have read the article about the Essentials of Forex Trading Terminology, you're already aware of what lot sizes are in Forex.
However, on the trading platform, it might be a little different. So, here's a simple guide for you to set lot sizes properly on the MT4.
Micro Lot - To trade one micro lot (1,000 units), you need to set the Volume at 0.01.
Mini Lot - For one macro lot (10,000 units), you need to set the Volume at 0.1.
Standard Lot - And, finally, to trade one standard lot, you need to set the Volume at 1.
Opening a Trade on the MT4
To open a trade, use any of the methods for placing an order that's stated above. In the video below, you'll find that the trade panel is used to open a trade.
Since the lot size was just 0.01 or 1,000 units, it means that for this EUR/USD trade, the pip value is only $0.10.
Once the BUY order is clicked, the order window pops up. Here you'll have the chance to review your order once again.
But as mentioned earlier, if you turn on the "one-click" trading mode and you click on BUY or SELL from the trade panel, it opens up a trade right away -- it won't take you to the order window anymore.
So, if you opted out of it, you'll see the order window where you can modify the trade type (instant execution or pending order), Volume (lot size), STOP LOSS, and TAKE PROFIT and you can add some comments for you to review later.
Managing your trade
Once a trade is placed, the area at the bottom of the chart displays the details of your trade.
There you will find the type of order you took (if it's a BUY or a SELL trade), the Volume, the price that you got in, any Stop-Loss or Take Profit orders, Swap (which are the overnight interest rates that you either earn or is deducted from you) and finally the floating profit or loss of your trade.
It's called floating because it doesn't affect your balance until you close your trade.
Closing a trade
The easiest way to close a trade on the MetaTrader 4 is to click on the "X" button on the right side of your floating profit and loss. Another way is to right-click on the trade you want to close and then click Close Position.
What is the Balance, Equity, and Free Margin in MT4?
The balance displays the remaining amount you have in your account. It starts with your initial capital, and it increases because of deposits and profits made or decreases due to withdrawals and losses.
Equity shows the amount of money you will have once you close your open trades; it can display a higher or lower value than your balance depending on your floating profit or loss.
For example, if you have three floating trades that equate to a $50 loss and your balance is $1,000, then your equity would be $950.
Trade 1 = + $10
Trade 2 = +$20
Trade 3 = -$80
Profit/Loss = $-50
Margin can be confusing since it requires an understanding of how leverage works, so if you don't know what leverage is yet, you can read this article first to have an idea about what it is.
The margin on MT4 is the amount of money that's "locked-in" your trade because when you use high leverage, and you refer to your balance or equity as a basis for taking more trades, you could be in for a lot of trouble.
Trades with high leverage will reflect in your margin. The best way to explain this is with a transaction.
For example, you want to trade £5,000 with your $1,000 account at the exchange rate of 1.3150, and the leverage your broker provided you is 1:100.
The formula for calculating the margin is this:
Exchange Rate x Volume / Leverage
So, your margin will be $65.75 (1.3150 x 5,000 / 100 = $65.75).
That $65.75 is small since you're trading only 5,000 units, but your account allows you to trade up to more than that because of leverage.
What if, for example, you traded 50,000 units, then you're margin would be $657.50, leaving you with a $342.50 free margin.
(1.3150 x 50,000) / 100 = $342.50
With that much free margin, you can load up more units, but it will not be in excess of what your remaining margin can cover.
Free margin is just the Equity minus the Margin.
Margin Level is determined using this formula (Equity / Margin) x 100.
When the percentage reaches 100%, that's usually the "margin call" level for most brokers, and at that limit, you can't take on any more positions, but you can still close open trades.
History displays your closed trades. You can also generate reports from this area by right-clicking on any of your trades, hovering to Report, and selecting either an XML or HTML format.
Mastering the MT4
There is so much stuff to learn about using the MetaTrader application that a single blog post can cover. But perhaps the best way to master this popular trading platform is to familiarize yourself with it by playing around with a demo account.
Demo accounts provide you unbridled access to the markets without exposing real money. You not only master the platform, but you can work on your overall trading skills too with the demo account's real-time prices.
OPEN A DEMO ACCOUNT
Learn the other benefits of a demo account and the steps to open one by reading our article.