What is Paper Trading or Simulated Trading?
Simply speaking Paper Trading or Simulated Trading is the trading from a demo account using standard trading platforms. It does not involve the investing of real-money. This is why paper trading is important for beginners want to trade stocks, option, futures or forex.
There are many sites; usually those of online discount brokers, which provide you paper trading account, usually known as demo trading account together with a trading software, may be of your choice. You can trade from these accounts as normal traders do. Thus paper trading help a trader to get familiar with things such as entry & exit points, profit targets, stop loss limits, position sizing, risk/reward profiles, level 2 market access, limit orders, etc.
The things to be noted when signing up for a paper trading accounts are:
There are many sites; usually those of online discount brokers, which provide you paper trading account, usually known as demo trading account together with a trading software, may be of your choice. You can trade from these accounts as normal traders do. Thus paper trading help a trader to get familiar with things such as entry & exit points, profit targets, stop loss limits, position sizing, risk/reward profiles, level 2 market access, limit orders, etc.
The things to be noted when signing up for a paper trading accounts are:
- Learn about the frequency in which stock prices updated.
- The software they provide is one used for real-time trading.
- Access to all essential tools like stock charts, level II, etc.
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