I am committed to reaching 100 paper trades as part of my strategy for honing my intraday trading skills. As of writing, I have done 57 paper trades and review what I did correctly and wrongly. Why is it important to take paper trading into account? To some traders, paper trading is so boring because there is no real money involved, among other reasons. But I choose to think differently, and I also went through that stage a long time ago. Continue to read to find out the real why I paper trade.
The Powerful Benefits of Paper Trading, Especially for New Traders
When it comes to mastering the art of trading, nothing beats practice (the right and proven practice). For beginners and experienced traders alike, risking real money while learning or testing new strategies can be a dangerous attempt. Paper trading helps you improve your skills, learn from mistakes, and test strategies without financial risk before investing real money.
Paper trading is the process of simulating real trading in the financial markets – stocks, forex, crypto, and more – without using real money.
Key Benefits of Paper Trading
1. Risk-Free Practice
Paper trading helps me learn strategies, trade setups, risk and trade management without risking my money, allowing me to make mistakes safely. I still feel new to trading after completing the Beyond Insights VTP and Intraday Workshop, so I need to practice. Kathlyn Toh, co-founder of Beyond Insights, points out that after school and university, we must accumulate years of work experience to master our professions. What makes us think that after a few days workshop, we can become good to go straight to live trading?
2. Strategy Development and Testing
For experienced traders, do you have a new trading idea or system? Paper trading lets you test and improve your strategies with real market data without risking real money. This is not why I do my paper trading for now.
3. Builds Confidence and Emotional Control
Trading with real money can trigger strong emotions—fear, greed, excitement. Paper trading helps me learn to handle emotional highs and lows while improving discipline.
4. Understanding Platform Tools and Features
Every trading platform has its unique tools and interface. Paper trading allows me to understand the platform, practice order placements, set stop-losses, and analyze charts and indicators. Once, in one of my paper trades, I configured a time-based order and wanted to set it to auto-close my position before the market closed. After I transmitted the order, it immediately closed because I made a mistake in the time-to-close parameter.
5. Performance Analysis and Learning
With paper trading, I can review my paper trades, analyze what worked and what didn’t, and refine my trading playbook. This constant feedback loop helps accelerate my learning curve. Through these 100 paper trades, I can assess whether my trading expectancy is indeed favorable. If it’s not, I wonder how I could be successful in live trading when I’m still losing in practice.
Platform / Broker with Paper Trading Feature
Below is what I am using right now or before for paper trading. And this is not a recommendation for you to use the same.
- MooMoo Malaysia‘s desktop and mobile platform offer paper trading feature. Do check out their new signup reward too. During my signup last time, I got a free 0.3 NVDA share.
- Charles Schwab brokerage offers paper trading feature and their ThinkorSwim platform offer a good charting, scanner and other features.
- InteractiveBrokers also come with paper trading account, and its low broker fees make it cost effective for active trades.
- TradingView’s powerful charting software offers a paper trading feature; I can even paper trade during Bar Replay. This is an alternative option especially if you are not ready to open a brokerage account yet.
Why Some Traders Skip Paper Trading
I was one of them more than 10 years ago. After graduating from Wealth Academy Investor in late 2014, I began live trading in early 2015, executing seven trades in my first month. After months of trading, I was making a loss and eventually stopped trading for years. Reflecting on why I avoided paper trading, I realize it was due to my overconfidence following the 3-day workshop and a cash win in the investing game boosting my confidence. The other reason is paper trading is boring; it is not real money.
While attending the Master Trader Bootcamp in Seremban a few months ago, I thought about whether the aversion to paper trading could stem from FOMO, or fear of missing out. My trading buddy doesn’t see paper trading as taking action, so he jumps straight into live trading. Everyone has their own reasons for avoiding the essential step of paper trading to become a successful and consistent master trader. It depends on what meaning we give to “paper trading.”
Final Thoughts
I am very committed to my paper trading party because Beyond Insights, the trainers, and Kathlyn keep emphasizing its importance. From the workshop preview to my Growth Investing workshop, Swing & Trend Trading workshop, Intraday Essential workshop, Intraday Professional workshop, and Master Trade Bootcamp, they have been saying the same thing. And those very successful trainers that are intraday traders, some of them practice a few hundred paper trades before going to live trading. We must practice our skills, review what we’ve learned, and use paper trading to prepare for live trading, where emotions play a bigger role.
What most people don’t get is that, especially for traders with extra money, a 1% risk of, let’s say, $100 or a few hundred dollars is not a big deal. I believe they could underestimate the emotional toll of losing multiple trades in a row, something every trader faces. Once the emotional threshold is hit, this is where people will give up or fear entering the market. Trading outcomes are random, so even experienced traders face losses. As a new trader like me, I have an even greater risk of losing trades due to my lack of experience and skills. With paper trading, I can master my skills, processes, and gain market experience to get me more ready for live trading. When I start live trading with better skills, I’ll improve my trading edge and be more prepared for losses. As Beyond Insights said, with good risk & trade management, a good reward/risk ratio of min. 2, min. 33% (1/3) winning trades will break even, and a minimum of 40% will make money.
Are you ready to uncover your compelling reason for engaging in paper trading? I wish you all the best in your journey too.
A lot of our very successful intraday traders, they do a lot of paper trade first.
Kathyln Toh, Founder, Director & Chief Trainer of Beyond Insights
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