Paper Trading Account: Definition, and Best Platforms

You can gain trading experience in real-time (or something very close to real time) and see how stock prices can change throughout the course of the trading day. Some of these platforms also offer research and analysis tools that can help you learn the ins and outs of the market. Paper trading allows you to trade stocks and other securities hypothetically, without putting any of your money at stake or taking on any risk.

With the development of online trading platforms, many online brokers (such as Interactive Brokers, Thinkorswim by TD Ameritrade, etc.) offer clients paper trading simulators. Such simulators allow traders to easily practice trading in the markets without the tedious process of having to write the trades on paper. With today’s technology, traders can paper trade options using either a market simulator or real-time market prices and software that emulates a trading platform. A modern online paper trading platform typically lets options traders enter and exit the market and assess their net positions virtually in real-time.

  1. Due to its superb strategy testing, those who are systems traders really like it.
  2. Webull Financial LLC is a member of SIPC, which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash).
  3. All of them offer terrific platforms, but the top selections on this list will have all the features any new or advanced trader could ask for.
  4. And if any losses do occur, they may have the ability to recover quickly without sinking even further.
  5. When paper trading, it’s important to keep an accurate record of trading performance and track the strategy over a long enough time horizon.

Paper trading is an excellent way to build your confidence as an investor. You can test strategies without the risk of losing cash and get comfortable with a platform’s tools. You’ll find everything you need to know about paper trading accounts in this detailed guide. Paper and live trading allow investors to make decisions on their own—without having to consult with an investment professional, such as a broker or dealer.

Neglects Emotional Reality

It’s best to start with small positions, risking small amounts of capital before increasing trade size. That gives you a better chance of staying in the game (i.e., not losing all your money) if you make a mistake or have a bad trade. You can find stock simulators by searching online for “stock market simulator” or “stock market game” or browsing for apps in the Apple App Store or Google Play Store. It can be helpful to read the relative purchasing power parity reviews in the app stores or research the numerous “best of” online lists to find a simulator that matches your goals and trading style. The sim platforms offered by online brokerages are generally a good pick and let you move seamlessly from sim trading to live trading. Since these venues are identical to the real-money trading platforms, it makes sense to practice paper trades with the same broker that you use for real assets.

A paper trade is a simulated trade that allows an investor to practice buying and selling without risking real money. The term paper trade dates back to a time when aspiring traders practiced trading on paper before risking money in live markets—well before online trading platforms became the norm. While learning, a paper trader records all trades by hand to keep track of hypothetical trading positions, portfolios, and profits or losses.

Not only is your face left intact, but your pocketbook is also safe. Our rigorous data validation process yields an error rate of less than .001% each year, providing site visitors quality data they can trust. By reading Five Minute Finance each week, I learn about new trends before anyone else. We do not manage client funds or hold custody of assets, we help users connect with relevant financial advisors. Take your learning and productivity to the next level with our Premium Templates. The site and app also helps users learn with a nice educational offering and a community with more than 20 million users worldwide.

Let’s outline the key benefits of paper trading, looking at the ways it shortens the learning curve so that novices have an advantage when it’s time to play the game with real money. SmartAsset Advisors, LLC (“SmartAsset”), a wholly owned subsidiary of Financial Insight Technology, is registered with the U.S. SmartAsset does not review the ongoing performance of any RIA/IAR, participate in the management of any user’s account by an RIA/IAR or provide advice regarding specific investments. Paper trading is frequently used by first-time traders to practice trading or by veteran traders to test whether their trading strategies have merit.


Day traders should ideally paper trade with the same day trading broker they plan to use for their live account since it will be as close to reality as possible. Diversifying your portfolio is another important strategy in paper trading. Just like in real trading, it is important to spread your risk across different assets and markets. This allows you to test different strategies and see how they perform in different market conditions.

Paper Trade Stocks vs. Options vs. Futures

Then fill out an application, and sit down for an interview with a broker. You’ll also learn to weather the emotions that come with the rise and fall of your investments, which can be stressful. Our clearing firm Apex Clearing Corp has purchased an additional insurance policy.

Best for beginners, anyone can use this online paper trading platform to refine their options trades. Additionally, several educational tools on the site teach you about the options market — one that’s often misunderstood by the public. Each broker has different requirements and offerings, so you should choose the broker that best fits your situation and needs carefully.

Once you consistently achieve satisfactory results in paper trading and have gained confidence, consider transitioning to real trading with caution. Set specific goals for what you want to achieve during your paper trading journey, such as mastering a particular strategy or improving your risk management skills. To maximize the effectiveness of paper trading, it is important to set realistic goals and expectations. There’s no money involved in paper trading, so you can’t make any money. To start paper trading on Webull, the first step is to set up an account and follow the steps to validate your identity.

Neither our writers nor our editors receive direct compensation of any kind to publish information on Our company, Tokenist Media LLC, is community supported and may receive a small commission when you purchase products or services through links on our website. Click here for a full list of our partners and an in-depth explanation on how we get paid. A paper trade in TradeStation showing the trade entry, profit target, and stop loss. Paper trading fails to address the broad market’s impact on individual securities.

Step 1: Choose A Paper Trading Account

We also offer real-time stock alerts for those that want to follow our options trades. You have the option to trade stocks instead of going the options trading route if you wish. Without honing your skills in a paper trading account, you’ll be broke in no time. Luckily, You get “virtual” money so you can practice your trading strategies without going broke. Despite all the downsides, paper trading really is the best way to prepare you for some real-world stock market trades.

There are several platforms available, both free and paid, that offer simulated trading features. Ideally, your live trading and paper trading results will be similar. If you are losing money, consider resuming paper trading for a while so you can figure out the problem. For example, you might be using the wrong order type, or your emotions may be leading to poor decisions.