DeutschCryptocurrency trading has been in full swing for the past decade. Speculators around the world have joined this highly volatile market, hoping to hit the big time. MetaTrader 5 (MT5) has proven to be a competent platform for executing trading strategies with digital currencies. Below, learn why MT5 is one of the best charting programs for crypto trading enthusiasts.
What is MetaTrader 5?
MT5 is a charting software introduced by MetaQuotes in 2010. It is the successor to the very well-known MT4 trading platform, which was released five years earlier. Basically, both packages are quite similar in their core functions.
The difference is that MetaTrader 5 offers slight improvements in certain areas. In addition, MetaQuotes emphasizes a true multi-market platform designed for assets such as bonds, futures and options.
Nevertheless, MT4 trading software is more popular than MT5. The predecessor is considered the better software and offers features such as more timeframes, assets and indicators, improved performance and a smoother user interface.
It is worth noting that MetaTrader 5 is only offered by crypto brokers and not by exchanges. What’s the difference? Brokers offer cryptocurrencies as derivatives from a “Dealing Desk” or a network of other brokers.
A derivative means that you trade with a replica derived from the price of an underlying asset without owning it. So the Bitcoin offered by a broker has the same value as the real Bitcoin, except that it is in a wallet on an exchange.
The main difference with a broker is that trading takes place between traders and brokers. In other words, you are trading against the broker, who can set their own prices and conditions. An exchange like Binance, on the other hand, allows trading between buyers and sellers via a publicly viewable order book. The first advantage of this model is that you can see the volume of trades with orders at specific prices. On the other hand, this privilege does not exist with MT5, as trades are essentially conducted with the broker and not with other market participants.
What Crypto Trading Strategies Can be Traded on MT5?
MT5 has 38 built-in indicators, including well-known names such as moving averages, the Relative Strength Index (RSI), Bollinger Bands® and Stochastics. These are sufficient to create multiple crypto trading strategies. Let’s take a look at a few of them on MT5.
Trend Trading Strategies
Trading with the trend is one of the simplest and most effective methods for trading cryptocurrencies or any other market. The concept is to buy or sell according to the prevailing direction of a particular coin over a period of time.
A simple way is to use a trend line, which is available on MT5. However, you can also use various trading indicators, especially moving averages. MetaTrader 5 allows users to adjust the moving average periods depending on their trading style. For example, short-term traders or scalpers prefer lower MA periods such as 5 and 10 days, while medium-term or swing traders can use 25 and 50 days.
Moving average crossovers are associated with trend trading. Not surprisingly, you can add multiple MAs with MT5 and explore various customization options.
Traders who are drawn to a less indicator-based technique can consider standard deviation channels and linear regression. They can draw these on their charts with MT5.
Momentum Trading Strategies
Momentum refers to the rate of acceleration of a market. Momentum trading involves exploiting this element by buying or selling a coin before it reaches its peak. Most indicators observe momentum using the concepts of “overbought” (very bullish momentum) and “oversold” (very bearish momentum).
Momentum Trading Strategies
Momentum refers to the rate of acceleration of a market. Momentum trading involves exploiting this element by buying or selling a coin before it reaches its peak. Most indicators observe momentum using the concepts of “overbought” (very bullish momentum) and “oversold” (very bearish momentum).
As mentioned earlier, the crypto market is volatile. This means that it covers a large price range or percentage distance within a short period of time.
Bollinger Bands are the first indicator on MT5 that can be used for volatility trading. Another tool worth mentioning is the Average True Range. Although it is a direction-independent indicator, it shows the number of pips that a particular crypto market has moved within a specific timeframe. Such information is very useful for estimating or predicting future price movements.
Support and Resistance Trading Strategies
A support level is a point that the crypto market reaches before moving upwards, while a resistance level is the point that the crypto market reaches before moving downwards. Most support and resistance strategies rely more on graphical objects than pre-programmed indicators.
Here, MT5 offers tools such as Fibonacci, Andrews Pitchfork and equidistant channels. Traders also have excellent flexibility in displaying key levels on their charts. Support and resistance concepts can be integrated into many strategies, such as trend trading, reversal trading, range trading and breakouts.
Other Useful Tools for Crypto Trading on MT5
Here are other ways to improve your own trading strategies and user experience on MT5.
- Profiles: This feature helps users to group markets based on different settings and thus better organize them.
- Automated Trading: MT5 is one of the most accessible platforms for crypto traders to create “robots” or automated trading systems. The software uses the proprietary programming language MQL5, similar to C++.
- Data Window: In this part of MT5, you can view the date, time, open, close, high and low values for a specific candle within the currently displayed timeframe. This feature helps to accurately mark levels on charts and make precise calculations.
MT5’s Simplicity and Freedom for Crypto Trading
The average charting purist considers the MT5 and MT4 trading platforms to be outdated compared to other complex software. Nevertheless, MetaTrader 5 offers some improvements to keep up with modern standards while maintaining the simplicity of its predecessor. Above all, it is a welcome platform for crypto traders who can experiment with unlimited strategies and benefit from other small but useful functions.
