MetaTrader 4’s market share, good, bad or irrelevant?
In the critical world of trading platforms, MetaTrader rules the roost, but can a 10 year old legacy platform still maintain such a tight grip on the retail FX industry with minimal changes to the user interface and remain slow to “keep up” with additions and extensions, lagging behind other newcomers? Back in 2008 when […]
In the critical world of trading platforms, MetaTrader rules the roost, but can a 10 year old legacy platform still maintain such a tight grip on the retail FX industry with minimal changes to the user interface and remain slow to “keep up” with additions and extensions, lagging behind other newcomers?
Back in 2008 when I was first introduced to MetaTrader 4 I thought “this is the bee’s knees”. It was light, fast and un-clunky like some of the other trading platforms I have used.
It was revolutionary to say the least and the combination of its simplicity whilst being über powerful made for love at first sight.
Fast forward a few years and MetaTrader 4 dominates the retail Forex trading scene globally. I appreciate good business and it is not only by chance that this happened.
Good ideas, solid foundation.
MetaQuotes, the company behind the MetaTrader trading platform and other tools had some really good ideas and managed to drive the business forward rapidly whilst maintaining the connection to retail traders to ensure they hold onto their market position through sheer volume of users.
Subsequently, MetaTrader 4 became a household name and although many may debate the reasons behind the success of this platform, placement seems to be the obvious starting point. Quite simply, MetaTrader 4 became the platform of choice.
Toward the end of 2012 and many of my colleagues went off to form their own brokerages. Again, MetaTrader 4 was not even a question. It was a given. You don’t have a brokerage without it.
Now we arrive at May 2016 and many of those in the know have begun to throw a question to us.
Trading platforms are still dominated by 10 year old tech. When/what is next?
Without offending anyone, this is a valid question and is currently on the mind of many in the industry.
2013 and the following years saw many a technologist and a series of Fintech startups push to create a “better” platform catering for what could be flaws in the market leading trading platform today, the venerable MetaTrader 4.
Whilst some have done extremely well, it appears at first glance that they are pushing water uphill.
What makes the MT4 so good?
There are two ways to answer this question. If you are a trader and use the trading platform on a daily basis, anecdotal consensus seems to be:
- It’s familiar
- It works
- It’s simple
- The rest just don’t feel right
- Everyone offers it
- I can use EAs and program my own
- Large community
- I can easily hedge
- I am not stuck with one brokerage
All of the above are valid. From a marketing or branding perspective the above reads good market positioning and strong branding that has led to the “Coca Cola” effect and a job well done.
No matter how many soft drinks manufacturers come after Coca Cola or how many stock competitors like Pepsi, exist, Coke wins hands down. In this case MT4 follows the principle set by the soft drinks industry.
Is this due to the fact that it was the first or the best? Most certainly not.
Many businesses in the industry are now built around MT4 almost in their entirety, and brokers already paying big bucks to maintain MT4 are not easily convinced to spend some more on new platforms and the education and time it takes to get their user base familiar with the “new”.
Top that pie off with the majority of traders life spans ranging anywhere from 2-6 months in the retail sector and it may become obvious why the competition in the platform arena has bee scant even if certain products from other firms are lauded to be better.
It’s not all MT4
Recently Andrew and I made our way to FinTech Exchange 2016 in Chicago, a satellite event hosted by Barchart and in its infancy with two years running. Flipping good conference and well worth attending next year.
The one thing we noticed is the variety of different platforms that operate within the exchange traded arena. The thing to note is that there is no one platform that dominates the retail sector quite like MetaTrader 4.
Look at Trading Technologies for example. A North American company that has been around for over 20 years and one of the most widely known and used trading platforms on the market, yet nowhere close to percentage market share as MT4 per capita of traders.
Even Trading Technologies realized that a 20 year old platform (and the code behind the scenes) needed a revamp. The company’s executives put all their resources into a combined effort involving all the global offices and staff to completely reinvent their main trading platform.
Another good anecdote to point out is many of the brokerages in the exchange-traded derivatives segment tend to operate on proprietary platforms and no one bats an eye lid, where in Forex, you find traders often believing that proprietary means they (the broker) can “mess with you” or perhaps is more likely to do so if the entire system is in house.
Whilst this is not the reasoning behind proprietary platforms, this statement is something I’ve heard many times over the years.
FinanceFeeds today spoke to Jannick Malling, CEO of tradable, who explained “In terms of diversifying into true multi-asset, for us that has certainly been the case and as we recently brought both physical stocks and CFDs onto or platform.”
“We still think there are a lot of opportunities for developers and platform providers in both ends of the space. In the higher-end segment, we see developers using our API platform to build solutions that are tailored to the specific needs of high-end traders, as well as standardized apps built for lower deposit traders, a space which seems to have gone mobile-first.”
“Adding multi-broker, multi-product execution capabilities to all these apps via one API is something that we think is driving both ends of the space and expanding and creating a lot of opportunities as a result” concluded Mr. Malling.
MT4 raises the bar, naturally.
Whether or not MetaQuotes intentionally has made little to no effort to reinvent its user interface or if the argument “if it ain’t broke don’t fix it” is the key here; MetaTrader 4 is the benchmark.
Anyone wishing to wrestle market share from MetaQuotes is going to have to have to not only be better, but either completely different in a good way, or a whole lot better.
It is not MetaQuotes or the famed MetaTrader 4 that is revolutionary in 2016. It is the users, service provider and brokers that rely on MT4 daily to run their business that keeps MT4 at the top.
Market education, disruption, deep pockets and a whole lot of patience will be required to get your new platform out there.
MetaTrader 5, I believe was MetaQuote’s solution to a natural business strategy of bettering one’s product and service to maintain market position long term. After all, you stop progressing, your competitors catch up.
However, I remember MetaTrader 5 launching in June 2010 (six years old next month). Banners and campaigns went out (from the brokers) and then remained as “launching soon” since then not really gaining much traction.
This is MetaTrader 5. This is MetaQuotes. It’s a natural upgrade but why has it failed to gain steam?
As seen in the news recently, MetaTrader 5 is back on the agenda and not without flaws pointed out in their new charging structure (for brokers). Whilst some of the additions and ability to hedge positions, again, nothing seems too different from its predecessor MetaTrader 4.
Can market share be shared?
I am a firm believer that if any platform provider were to want a larger portion of the market share moving forward, they will need to convince traders first.
It is one thing to have a “better” or “different” product, however; to get brokers to sign, pay and promote your platform, you would need to disrupt starting at the end user.
To get users familiar with your product they would need to use it daily. To get them to use it daily brokers need to be offering your platform.
In this simplicity the complications start. I’ve had this conversation with many industry executives. Do you offer a platform free of charge (no setup costs, fees) like UniTrader, BMFN’s proprietary platform? Do a quick push to get the platform in front of the end users and push market share your way to then monetize later on?
This is something that could be looked at.
What you think really matters
What are your thoughts on MetaTrader’s hold on market share? Good or bad?
Do you think the market has the capacity for another platform to equally compete considering the various factors above including lifecycle of traders, cost to take on a new platform and the fact that the majority of the industry has based products, services and their brokerages off MT4 for so many years as the platform of choice?
Featured image By Thomas J. O’Halloran, photographer – Floor of the New York Stock Exchange. This image is available from the United States Library of Congress‘s Prints and Photographs division under the digital ID ppmsca.03199. Public Domain,