Paper Trading

What Is Paper Trading?

Paper trading or simulated trading uses a virtual transactional environment to simulate trading without using real capital.

Paper trading can be practiced through various applications and software or traditionally by paper-based bookkeeping methods.

Why Is Paper Trading Used?

Primarily, paper trading is used to evaluate real-life trading processes, expectations, and outcomes without incurring any risk.

Moreover, as the trading scenarios are purely hypothetical, they can be applied to any financial instrument, be it indices, forex, stocks, bonds, futures, margin products, or cryptocurrency.

Novice traders can begin to invest a certain amount of virtual assets and leverage them onto the data provided by the market.

This way, they can generate accurate results, test multiple trading strategies, gauge their sentiments, and practice risk management before risking any actual money down.

Possible Drawbacks

The only potential downside for paper trading is unlimited trade capital which can lead to bad trading habits.

The other obstacle faced in paper trading is the absence of real outcome-based emotions. Loss is met with relief of evading real penalties, and gains bring out FOMO (Fear of missing out).

However, these problems can be mitigated by limiting the virtual trade balance and maintaining a broader view of trading outcomes.

Keeping virtual trading scenarios close to real-world trading is known to achieve the most beneficial results.

What Are the Best Paper Trading Platforms and Apps?

Paper trading can be practiced in several ways depending on the ease of accessibility and replicability of results. It can be done on paper or a complex trading simulation.

These days, modern trading platforms are preferred for their simplicity and accuracy of market simulation.

Functionally, many of these platforms tend to be similar in allowing users to choose the desired time to place a fake buy or sell order.

Then, based on the information on the performance of the financial instrument, gain or loss-based outcomes are presented, similar to actual trade.


TradingView provides an in-depth and detailed look into paper trading with customizable charts, detailed metrics, and functional projections.

While the interface can be overwhelming for rookies, its charting options make it a go-to platform for day traders.