What is Paper Trading?
Paper trading is simulated trading with fake money that allows you to practice strategies and test your trading plan without risking real capital.
Paper Trading Explained
Paper trading is essential for new traders and for testing new strategies. It builds muscle memory for order execution and helps you see if your strategy actually works before committing real money. The main limitation is that it doesn't replicate the emotional experience of real trading — there's no fear or greed when the money isn't real.
Real-World Example
You develop a new breakout strategy. Instead of risking $5,000, you paper trade it for 30 trades. Results show a 40% win rate with average winners being 3x average losers — a profitable edge. You now confidently trade it with real money.
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