What is paper trading?

Paper trading is a simulated trading process where investors practice buying and selling securities without risking real money. Instead of executing trades in the actual market, paper traders use virtual accounts to simulate the experience of trading.

Here's how it works:

1. Virtual Account: Paper trading provide users with virtual accounts, with virtual money or "play money" that simulates real trading capital.

2. Simulated Market: Paper trading simulate real market conditions, including real-time quotes, order execution, and market data.

3. Practice Trading: Users can use their virtual accounts to practice trading various financial instruments such as stocks, options, and ETFs. They can buy and sell securities, place different types of orders, and experiment with various trading strategies.

4. Risk-Free Environment: Since paper trading doesn't involve real money, users can experiment with different trading approaches and strategies without the risk of losing capital. It's an excellent way for novice traders to gain experience and confidence in trading before risking real money in the market or for experienced traders to test out the platform before committing capital.

5. Learning Tool: Paper trading serves as an educational tool for investors to learn about the dynamics of the market, understand how different trading strategies work, and practice risk management techniques.

6. Performance Evaluation: Users can track their paper trading performance, including gains or losses and overall portfolio performance. This allows them to assess the effectiveness of their trading strategies and make adjustments as needed.