Getting Started with Trading · 09
What is paper trading?
Make the beginner mistakes for fake money.
Paper trading is simulated trading: you record or execute hypothetical trades without putting real capital at risk. It can help beginners practise a repeatable process before emotions and real losses enter the room.
A simulator will not make you profitable. It can make your mistakes cheaper to discover.
Quick answer
How does paper trading work?
You choose a security, define the entry, position size, risk and exit exactly as if the trade were real, then record how the position would have performed. Some platforms simulate order execution automatically; a spreadsheet or journal can also work if prices and assumptions are recorded honestly.
The goal is not to rack up imaginary profits. The goal is to test whether you can follow a defined decision process.
What can beginners learn from paper trading?
Paper trading can help you practise finding setups, reading charts, choosing order types, defining invalidation, sizing positions and keeping records. More importantly, it exposes whether your rules are actually specific enough to follow.
“I would probably sell if it looks weak” sounds reasonable until you try to log the rule. Paper trading forces vague thinking into measurable decisions.
What should you record?
Record the date, security, setup, catalyst, entry assumption, position size, invalidation point, planned exit logic and outcome. Also record whether the process was followed. A profitable trade that ignored the rules can be bad evidence; a losing trade executed exactly as designed can still teach you something useful about the method.
What does paper trading fail to reproduce?
Real trading introduces emotion, slippage, partial fills, liquidity constraints, delays and the psychological difference between watching an imaginary loss and watching your own money disappear. Simulators can also make fills look cleaner than real markets.
That means strong paper results are not proof of future profitability. They are evidence about a process under simplified conditions.
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How long should you paper trade?
Do not use an arbitrary number of days as graduation. Use enough observations to see the method across different outcomes and market conditions. A handful of winning trades tells you almost nothing.
The question is whether the rules are clear, the results are being recorded consistently, and the process behaves well enough to justify a carefully controlled next stage.
Where can Australians practise?
Some brokerage and charting platforms provide simulated trading tools. ASX has historically operated a public Sharemarket Game; as of September 2026, ASX says the public game is taking a break while it is redesigned and redeveloped. Check current availability rather than relying on old links claiming registration is open.
What should you learn next?
Combine paper trading with a focused stock watchlist, a written risk process and BowerLine’s Technical Evidence Checklist.
Reference: Australian Securities Exchange, “Trading games”, current as accessed September 2026.
