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How Can Paper Trading Prepare You for Live Trading?

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The term “paper trading” is often used interchangeably with simulated trading or demo trading. All refer to practice trading in a simulated environment as a way for prospective traders to test the waters before putting real money on the line in live markets.

Paper trading provides an opportunity for traders to test their strategies and market analysis to see how trades might have played out. While live, real-time market data is often used for paper trading, it is conducted in a simulated account so there is zero monetary risk.

No Paper Required

In more ways than one, no actual paper is needed to paper trade!

While named after the practice of writing hypothetical entries and exits on paper, today’s electronic trading provides a much more immersive simulation experience. In addition, paper trading using a trading software allows would-be traders to practice on the platform they will be using to place trades.

Analyze & Trade Markets Through Free Simulation

Many consider simulated trading to be a cornerstone of trading education. For one, it gets traders to take the first step of downloading and installing a trading platform with sim trading capabilities.

From there, most traders learn basic technical and/or fundamental analysis and determine which futures contracts and time frames to focus on.

The NinjaTrader platform includes a built-in simulated trading environment designed to mimic live trading as closely as possible. With technical analysis tools including indicators, drawing tools and chart styles, paper trading with NinjaTrader helps prepare you for live trading through a comprehensive experience.

As you execute “paper trades” through NinjaTrader in a sim environment, the platform automatically tracks your performance as it would if you were using real capital. You can also analyze your paper trading results to identify what is working and what is not.

Pictured above, NinjaTrader’s Trade Performance window provides a comprehensive look at trading results and can be filtered by instruments and accounts traded.

Test Your Trading Ideas with Zero Risk

Paper trading allows traders to explore different strategies and market approaches before putting real money on the line. This can help traders gain confidence with their trading methodologies as well as operating the platform.

Additionally, sim trading in NinjaTrader is available for multiple asset classes. For example, paper trade futures such as E-minis or commodities, or try paper trading forex instruments such as the EUR/USD currency pair.

The Sim101 Account

NinjaTrader comes with a built-in simulation account, Sim101, specifically for the purpose of paper trading. The Sim101 account behaves identical to a live account in that it monitors cash balance, profit & loss and other financial parameters.

The Sim101 account can be customized and reset at any time and additional simulated trading accounts can be added within the Accounts tab of the NinjaTrader Control Center.

Please note: Although NinjaTrader’s simulation environment was designed be as close to live trading as possible, paper trading cannot fully replicate the live trading experience. When trading real capital, traders should be aware of the risks in trading unpredictable markets.

The NinjaTrader platform is always free to use for advanced charting, backtesting & trade simulation. Before trading with real capital, traders can take advantage of NinjaTrader’s multitude of features and potentially prevent costly mistakes while maximizing their long-term trading trajectory.

Along with free unlimited access to trade simulation, NinjaTrader also provides free trading charts, backtesting, daily training webinars and more. Get started paper trading with NinjaTrader today and put your trading ideas to work!