As you might already know, Paper Trading allows you to trade in the markets using ‘virtual cash’. So you won’t lose a single penny from your pocket even if your trade ends up in a loss.
There are numerous paper trading platforms out there but the problem with most of them is that they do not really simulate the real market conditions. In this post, we shall look at the limitations of the traditional paper trading platform and learn the most scientific way of paper trading using the Tradetron platform.
The Pitfalls of Traditional Paper Trading Platforms
When you trade in the real market, there are risks involved with respect to latency, slippages, unusual price spikes, etc. However, if the paper trading platform does not account for these risks, it may not produce meaningful results.
Let’s understand this with an example – suppose you want to test a strategy that buys a stock at 9:30 AM every day and squares off at 3:15 PM.
Say the stock price is 100 at 9:30 AM on a particular day as per the charts. However, the real execution price may vary depending on bid-ask spread and latency in placing the order.
Traditional paper trading platforms would always show the buy price as 100 because they do not account for real market conditions.
While advanced paper trading platforms would actually try to simulate your trade on the real exchange, and record the most probable execution price.
And this is the very reason that your strategy looks profitable during paper trading but fails miserably during live deployment.
Also Read: Virtual Trading Platforms in India
Accurate Paper Trading using Tradetron Platform
Tradetron is an advanced platform where you can build a strategy without coding. paper trade it on any exchange, and deploy it live once you are satisfied with the paper trading results.
When you paper trade using Tradetron, its strategy engine tries to simulate the real market conditions as much a possible and provides you the most accurate results
While deploying your strategy in Tradetron, you need to select the broker as “TT Paper Trading“, and you’ll see the real market simulation as well as P&L of your strategy on a daily basis on its dashboard.
And once you are comfortable with the paper trading results, you can deploy it live with your real broker. As simple as that!
Even with Tradetron, the paper trading price and real trade price might differ slightly due to the involvement of a 3rd party (broker) in real trades. But that difference is inevitable unless you start real trading.
Learn step by step methods to get started with Tradetron here
And don’t forget to paper trade your strategy for atleast 1 month before you start trading it live.