What are the pros of paper trading?
Let’s take a step back and understand what paper trading even is. Paper trading is a trading practice where investors use virtual or paper money to buy and sell stocks without any financial risk. They can do this in real-time.
This post is about the pros of paper trading.
Let’s dive into the top 3 pros of paper trading:
1. Risk-Free Practice
One of the best reasons to engage in paper trading is for people to test out strategies without risking their real money. It’s great for beginners, and even experienced traders, as this allows them to try new strategies.
2. Learning
Again, this is great for beginners, because it allows traders to buy and sell, in real time, without any risk! It enables people to learn how the stock market works, which is a great benefit! Especially, because the stock market and understanding finances can be quite daunting.
3. Familiarizing Brokerage Platforms
Understanding the stock market and how it works by itself can be quite daunting. Adding the different platforms can be even more challenging. However, paper trading allows traders to familiarize themselves with the platforms and the available tools. This is so that when people use actual money to trade, there will be less of a learning curve.
To reiterate, the top 3 pros of paper trading are:
- Risk-Free Practice
- Learning
- Familiarizing Brokerage Platforms
