How to Use Paper Trading Apps & Simulators

Feb 8, 2022

Written by:
John McDowell

Paper trading is a common way to train your “chart eye” to make successful trades. And, while there are a ton of paper trading apps to choose from, the way you use them is key to your success. In this post, we’ll discuss a few tips and tricks for using a paper trading app.

What is paper trading?


Paper trading is a term used to describe a simulated trading environment. Most brokers will have this feature available to you during market hours. It essentially allows you to place trades using live data, but with fake money.

However, one drawback to most of these platforms is that the simulated environment is only available during live market hours. TradingSim differentiates itself as a niche paper trading app in that it allows you to replay the market as though it were live. The cool thing about this is that you can do it any time of day.

Paper Trading looks and feels just like real trading
Paper Trading looks and feels just like real trading

We have written a comparison of our product and a few other replay simulation trading apps here.

Why paper trading is important to your success as a trader

Paper trading isn’t as popular as it ought to be. The reason for this is that many believe in the misconception that it is useless to trade markets without real money. The argument is that your emotions will not experience the ups and downs of real money swings.

The problem with this argument is that it doesn’t account for the confidence that is built through “backtesting” a strategy. Even world-renowned trading psychologist Brett Steenbarger agrees with us on this. Here are his words:

Having a plan in the calm of the moment is different from maintaining and acting on the plan once we get punched in the nose! 

That doesn’t make simulated trading worthless, however.  Even the best boxers practice in the ring away from formal competition to work on their movement, their combinations, etc.  Similarly, basketball teams prepare for the next game by scouting the opponent and then practicing against the offense and defense that the opponent are likely to use. 

And, of course, where would a Broadway actress or actor be without practicing lines away from the distraction of crowds. 

Every performance domain relies on practice away from formal competition to build performance in the heat of the moment.

Dr. Brett Steenbarger Ph.D.

Therein lies the importance of paper trading. It’s really all about discovering your edge in the markets. Then, once you’ve tracked the probabilities of success with that edge, you can employ real money with confidence. Here’s an example of the TradingSim paper trading analytics page:

TradingSim Paper Trading Analytics Page
TradingSim Paper Trading Analytics Page

The more you track, and the more you progress, the more confidence you will gain by paper trading.

What to look for in a paper trading platform?

While most paper trading apps will have the necessary tools you need to simulate trades, there are definitely some non-negotiables.

1. Dynamic charting

As with any trading platform, you need the ability to have multiple charts and multiple time frames. Multiple time frame analysis is often the key to success in day trading. To that end, you need a trading simulator that shows 1 minute, 5 minute, or any other time frame charts key to your strategy.

Multiple time-frame charts
Multiple time-frame charts

2. Watchlists and scanners

Watchlists and scanners are a must. How else will you know what’s hot, what’s running, and what’s not? Every trader should have a live scanner and the ability to build a “stocks in play” watchlist for that day.

Watchlists and Scanners are a must for paper trading apps
Watchlists and Scanners are a must for paper trading apps

In Tradingsim, we have a live scanner on the left hand pane of our paper trading app. We also have the ability to filter that scanner by your own set of criteria. This way, you can adjust the parameters to only show the stocks you like to trade.

It looks something like this:

Morning Gappers
Morning Gappers Scanner Criteria

3. Simulated trading montage + hotkeys

This is an obvious one. No simulated trading app is going to be complete without the ability to actually place trades. However, simple buy and sell buttons may not be enough. What you really want is to be able to place the type of orders you would in a real environment.

For example, you may want to place a limit order, a market order, or a range stop order. Depending on your strategy, these are important.

Different order types inside a paper trading app
Different order types inside a paper trading app

In addition to the order montage, you want to be able to use hotkeys if you’re a day trader. Many stocks react quickly. To take advantage of moves, you need to be swift to enter. Using hotkeys can do just that for you, and more.

Hotkeys in the TradingSim application
Hotkeys in the TradingSim application

4. Level 2 and Time and Sales

As a day trader, finding orders stacking on the bid or the ask can give you insight into where the key levels are on a chart. But how will you do that without a proper level 2 or time and sales data?

Make sure your broker has this feature when you decide on a paper trading platform.

Level 2 and Time and Sales Windows
Level 2 and Time and Sales Windows

5. Paper trading analytics

These days there are many options for paper trading, but not all will track your progress for you. Often, you’ll find yourself downloading the data into an excel spreadsheet, or using a third party tracking software.

In TradingSim, we’ve tried to simplify the process for you by including an analytics page built into the simulator. After you place trades, the trades will automatically populated your analytics page. This gives you the ability to track your progress, tag your strategies, and see your overall progress.

Best practices for using a paper trading app

Like we discussed above, if you’re not using a paper trading simulator to test a strategy, you’re probably not getting the most out of it. Many have the false notion that paper trading apps are for fun. Well, there is truth to that if you enjoy replaying the markets.

However, the fun should be found in actually discovering a probable edge in the market. Once you find your edge, it’s time to make money.

As we discuss in some of our SimCast interviews, the best way to simulate is through proper risk management and edge analysis. Perhaps you would benefit from using something like the Kelly Criteria, like we discuss in this episode.

Whatever your use, it will reflect the way you interact in the market with real money. Keep that in mind. The more disciplined you are, the more you’ll get out of it.


If you’re just getting started in trading, we recommend you take a look at all the free resources we have here at Check out our content on the blog, our YouTube page, and be sure to follow us on Twitter where we put out new content daily.

If we can help you on your journey with paper trading, please don’t hesitate to reach out to us!


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