what is paper trading

What is Paper Trading

In the old times when the simulators were not existing people who wish to involve in the stock trading, they start writing their decisions on the paper. They write down an amount and then record their daily decision with buy and sell end results.

In this way, they test their skills and evaluate either they are able to trade or they need further education to support their decisions. That was the real paper trading era.

With the advancement in technology everything is revolutionized and stock trading too. Nowadays paper trading is replaced by the simulators.

A simulator is a software in which trader get real-time price feed and true market conditions to test his skills.

Paper Trading With Virtual Funds

Virtual/hypothetical money is provided in this software along with live price feed and true market conditions which enables a trader to learn the trading. It is just not buying and selling trading operations like order types, interest, execution cost, and rollovers become possible to hand-in on the simulator.

You can say that using simulation software permits a new trader to invest and test the depth of water before jumping in.

Under real-world conditions without investing real money, many investors educate themselves to start live trading.

What is Paper Trading

Hopefully, now the concept is quite clear that simulation trading whom we call virtual trading or demo trading is actually a modern form of paper trading. And referred to as paper trading.

In the current high-tech environment where most of the trading decisions are made by algorithms/computers, it’s not easy to trade the stocks. Learning how to operate the brokerage software also become possible on simulation or paper trading.

Make Strategy in Paper trading Stage

Forming a strategy is a hardest to do the job in this market and in the risk-free environment, an investor can tune it well and can test for different instruments.

It is just like pilots learn to fly on simulators for the specific hours for very basic flying experience before they actually take to the air in a real plane with passengers at risk.

Get your Feet’s Wet

When You signup and actively involved in the paper trading there you will be in the world of trading. Keep an eye on the economic event and important news.

You will be getting the technical insights and updates from the broker that will push to learn more and know about the things. You will get invitations for the webinars and also receive the learning material as well as live support.

Save your Money

Most of the trader loses money and they always remain in search that how to figure out the things. If you want to become a good trader then you need to figure out the things in the paper trading stage.

This will allow you to save your hard earned money and you can invest the same to make money from stocks trading.

Paper trading will offer you a realistic trading scenario where you can apply all of your knowledge and trading skills.

You won’t lose any money — and on the flip side, you won’t see any gains.

You won’t lose any money — and on the flip side, you won’t see any gains. 

There are a lot of paper trading simulation software available nowadays in the financial market. Financial firms are offering these ready to use private labeled software aggressively.

You must prefer to trade with the same software and broke whom you choose for your live trading.

Brokers and simulation software providers also offer technical advice along with learning material and webinars.

Which makes learning easy for new trader/investor. Paper trading is a great trading tool and a simple process of taking hypothetical decisions. The only difference is that you are not putting your real money in it.

How to Begin 

Before getting in you should already have a very basic knowledge of the market and a blueprint of trading strategy and trading plan. If you do not have these then do some research all the related material is available free of cost on the internet.

Choose your preferred broker and signup for the simulation’s software.

I always advise trading with the same money in the learning stage which you have in plan to invest when you move on to real trading.

What is Paper Trading

Set your goals and targets and start playing with your strategy and focus on the under listed things,

  • Market conditions are not easy to understand for a new trader. So, in paper trading familiarize yourself with the market conditions of new exchanges and products.
  • Learn to use different order types.
  • Test your strategies.
  • Learn to make analysis while using technical tools.
  • Learn the money management techniques and get hands on the market depth.
  • Practice with the same strategy, features, and tool which you will be using in your live trading.

Practice Makes Perfect

Professional traders in this market always have a trading system which is a proven one and they earn on that basis. For a new entrant in this market, it’s not easy to make such a system, it’s paper trading which provides this opportunity to learn and execute again and again to become perfect.

Obviously, in paper trading, you will not lose anything while if you make a mistake in real trading that will cost you.

Record Everything

Record your trading results it will help you to evaluate your trading process and decision-making model whom we call strategy. On the basis of these records you can fine tune your trading strategy.

  • Your entry levels
  • Your exit Leve
  • Quantity of shares
  • End Result Profit or Loss
  • Also, record the process of decision making that why you enter into trade.
  • Particular reasons why stop loss is being hit.
  • Any unexpected event.
    And in last what you learn from the particular trade.


keep in mind that successful record is the biggest motivational tool for traders and their records will also help you to build confidence on your trading approach.

Paper Trading Accounts vs Live Accounts

The only difference is virtual money in the paper trading and real money in the live trading account and few other minors. There are a few things that are not possible to learn over paper trading. Which are emotions and Greed because these two matters only when a human being deal with the real money.

So when you move on to the live trading you must take very small steps until you become confident and can handle these two.

Do not use paper trading for a longer time period as if you are leaning attention than one month is enough. Start taking the real risk thereafter.

Getting Start with Paper Trading

There are a lot of firms which are offering the same but everyone is not valuable. When you search for paper trading a lot of simulators will come on your first page. Do not sign up for the trading games as those provide hypothetical data.

What is Paper Trading

You need to live data feed which you can get with any broker. This is the reason I always suggest to choose a broker first and then sign up for a demo.

If you want to give its try without broke then tradingview is the best option they offer all that a trader needs to make decisions.

Final Words on Paper Trading

Be realistic in our trading targets, try to set the measurable and achievable targets. The best way is to set your targets in the percentage of retunes and always follow a bigger picture.

Try to make your own strategy and get command over it. Losses and upsets always come into your way handle that with more practice and learning. Downgrade your expectations and always analyze your trading performance to become a better trader. This market has the greatest potential of earning if one learns systematically then it’s easy to learn it.

Other Resources

Paper Trading Benefits and Limitations

Swing Trading Strategies

Tradingview

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