paper trading paper trading

Paper trading means simulated trading without involving money. This is to gain experience and to keep in check the emotions that can get in the way while trading. The term dates back to a time when aspiring traders would practice on paper before risking money in live markets. Today, most practice trading involves the use of an electronic stock market simulator, which looks and feels like an actual trading platform. It can also help to develop new strategies that can be implied in the real market.

To get the most benefits from paper trading, an investment decision and the placing of trades should follow real trading practices and objectives. The paper investor should consider the same risk-return objectives, investment constraints, and trading horizon as they would use with a live account.