cTrader’s Ascent and the Slow Death of MT4

If you ask your average retail Forex trader what platform they use, they are probably going to say MetaTrader 4 (MT4). The venerable grandaddy of the Forex trading platforms, MT4 has been around since 2005 and is still much more popular than any other trading platform.

But things are changing and changing fast, retail traders are younger and more tech-savvy than ever. The economic impact of the COVID-19 pandemic has led to a surge in interest from millennials in Forex trading. As more young people look down the barrel of long-term unemployment or under-employment, many are looking to alternative sources of income.

Not weighed down by the entrenched opinions of the traditional trading community, this new breed of traders is more interested in efficiency, flexibility, and the superficial user experience (UX).

Which is where cTrader comes in.

Transparency First

Launched by Spotware in 2010, cTrader was originally just a simple trading platform – built to fill a gap in the market. Back in 2010, traders did not have many options when it came to their trading platform. MT4 was around of course, but the only alternatives were proprietary platforms,
owned and operated by brokers and with limited functionality.

MT4’s USP was its customisability (via user-created trading algos) and it’s mobility. You could switch broker and take your version of MT4, with all its custom indicators and expert advisors (algos that place trades automatically within user-set parameters) with you.

But MT4 had a monopoly in the space, and as every good capitalist knows, monopolies are terrible for innovation and consumer choice.

Spotware saw that MT4, while a technically excellent platform was, at its core, not trader friendly. Brokers could (and still can) manipulate price feeds and execution times. When the South African FSCA liquidated JP Market (previously one of the largest Forex brokers in South Africa) in September, one of its primary justifications was the manipulation of MT4 price feeds for traders that JP Markets deemed too profitable.

cTrader, in comparison, is completely transparent. Spotware’s motto is Trader’s FirstTM and this is reflected in the cTrader product. Spotware requires brokers who use the cTrader platform to connect with at least one of Spotware’s recognised liquidity providers, and all prices shown to cTrader users cannot be manipulated by the broker.

This transparent approach has also seemed remarkably prescient. In the years since the Swiss Franc shock in 2015 (when the Swiss National Bank removed the Franc’s peg with the Euro without warning, causing a number
of smaller brokers to collapse) CFD regulation has become more strict across many jurisdictions. cTrader’s built-in transparency is now an attractive element for brokers as proving regulatory compliance is a much simpler affair.

Transparent and More Profitable

At this point, it’s also worth mentioning a little-known fact: 35% more cTrader users are profitable compared to the industry average. This amazing statistic comes from Spotware’s internal calculations and highlights why cTrader has become MetaTrader’s main competitor. But what is it about cTrader that makes traders more profitable? There are two reasons, and both are built into the infrastructure of the cTrader platform.

Firstly, cTrader is offered to brokers on a platform-as-a-service basis and brokers pay Spotware based on volume traded. This means that the more traders succeed with cTrader, the more Spotware profits. The result is that Spotware has a real incentive to provide traders with the best chance to trade profitably.

Secondly, unlike MetaTrader and broker-owned platforms, cTrader only functions as an ECN (Electronic Communication Network) platform. While ECN execution does have its critics, ECN brokers have a real motivation to keep their clients profitable. Because of the tight spreads implicit in the ECN model, traders usually pay a commission to the broker per trade. The result is that the more successful an ECN trader is, the more commission they will pay to the broker and the more profitable the broker will be.

These dual motivations to support profitable traders, both from Spotware and from the brokers themselves, has a real impact on the way cTrader brokers and Spotware themselves operate.

Spotware maintains the cTrader forum, a place for cTrader users to post suggestions to the developers for new features for the platform, get support from the community and stay on top of any product announcements and other news. Spotware continuously improves cTrader with enhancements stemming mostly from community feedback, this regular interaction with traders results in several platform updates and upgrades a year.

cTrader brokers also tend to have a greater focus on their clients’ overall wellbeing – this includes better standards of education, analysis and general trading conditions. It is not a coincidence that the best cTrader brokers are also ranked as some of the best brokers in the world.

Other cTrader Advantages over MT4

While the broader overview of how cTrader functions goes some way to explaining the platform’s recent ascendancy, cTrader does not disappoint on technical front either. cTrader’s advantages over MT4 are many:

• cTrader does not need to be open and connected to a broker to keep a trailing stop loss functioning like with MT4.
  
• The ‘Depth of Market’ function is easier to use (colour-coded and different profiles available) than MT4’s.     
  
• cTrader’s data sets (for backtesting trading robots) are more complete than MT4’s and support real tick data backtesting.        
  
• A core component of the cTrader platform, cTrader Copy allows any trader to become a Strategy Provider and broadcast their trading signals to followers for a fee. Investors can, in turn, discover strategies, and copy them without any long-term commitment.
  
• cTrader has a FIX API and its coding language is more versatile than MQL4. The FIX API allows for total portfolio management with a trading bot. For example, a trader could perform cross-instrument trading with a statistical arbitrage robot. This type of trading is not possible with MT4 because each EA only performs calculations on one chart window at a time.        
  
• The cTrader ID is a single user profile attached to all a traders cTrader accounts. It provides traders complete control over their accounts. From the cTrader ID site, traders can connect to other traders, view and revoke active sessions, and control which devices are authorised to use cTrader.

Finally, in a real blow to MT4’s ability to attract the millennial generation, the MT4 desktop application no longer functions on any MacOS after Catalina (version 10.15) after Apple removed support for 32-bit applications.

What now for MT4?

So, does this all spell doom for MT4? Not in the immediate future. MT4 is so entrenched in the Forex industry it will take years for it to be replaced fully. MT4’s creators, MetaQuotes, have been trying to get brokers and traders to move to MT5 (without much success) for almost a decade.

MT4’s lightweight profile, customisation and widespread use are difficult things to counteract. But a new generation of trader is arriving, and in large numbers. They will not be looking to go with the existing paradigm
but will instead be looking for how to best serve themselves. MT4 is old,
superficially ugly, counterintuitive in many ways, and (worst of all) limited
in functionality.

As cTrader celebrates its tenth birthday, be prepared for the slow demise of MT4.