Paper Trading: Beginners Guide to Mastering Crypto Trading

When it comes to trading, ‘practice makes perfect.’ So how does a newbie with no experience in crypto trading avoid errors that will lead to loss of funds as well as test new trading strategies? The answer is simple –Paper trading! In this short guide, we shall look at paper trading, its merits and demerits and platforms that can allow a newbie to practice strategies to perfection. 

What is Paper Trading

Paper trades occur on simulated platforms where a user can buy and sell assets using virtual money. Although it is called Paper trading, no actual paper is needed for transactions on these platforms as the trades are virtual. A trader can take advantage of these engines to simulate the activities of the live market such as using stop losses, setting limits and placing orders. It enables novice traders to learn how to trade while professional traders utilise it in testing new strategies. 

Simulating real-life actions is not new as pilots in training utilise such methods in recreating aircraft environments and flight. In crypto trading, it is similar as traders are placed in an environment similar to a live market and can practice the strategies they have learnt. Newbies can use virtual funds to learn how a platform works and fine-tune their skills.

Crypto Paper Trading Simulators

There are several platforms that will offer you demo accounts to practice your crypto trading skills. A platform such as Trading View offers paper-trading for both cryptocurrency and the stock market catering to a wider audience. Traders looking to go into futures trading may want to take the BitMEX route; the platform provides a great tool for learning margin and leverage trading. Etoro also provides a virtual trading feature for its users to learn how to trade crypto assets. A platform like CoinMarketGame will give you up to $20,000 virtual funds with which you can practice your trading skills. While you get $10,000 to learn leverage trading on MT4 Demo Pro and MT5 Demo Pro. These platforms will help traders learn the right calls when the time comes to trade with real money.

Merits of Paper Trading 

Risk-Free Trades: A trader is free to take as many trades as possible to try out skills acquired without the fear of losing real funds. It doesn’t matter the dip or bearish run the market takes, no real money is used, therefore no losses are incurred. 

Builds Market Knowledge: Beginners can practice as frequently as possible strategies learnt and improve on market elements like using stop loss, buying the dip and even when to short or long a coin. It will also aid in carrying out market research and accessing pre-buy or sell conditions. Since trading is not something you become proficient in overnight, practising with paper tools will enable mastery of knowledge gained. 

Develop Confidence in Risk Taking: Traders can build confidence in taking risks as they can now understand how the market works and what manoeuvres will be profitable in the short or long term. 

Avoid Fear and anxiety while learning: Trading as a novice with real money can be very stressful as you are afraid of making the wrong moves. But a paper trading platform gives you the opportunity to focus on learning while trading without fear.

Demerits of Paper Trading 

You can not make a Profit Off Trades: Since the funds you are trading with are virtual, you can not keep the profit on any trades that makes a hit. On the flip side, you also do not make losses either. Where most newbies find this frustrating is not taking the trade in real-time and making a profit. 

Since no emotion is attached, it doesn’t reflect real-time trading: In the live market, your funds are involved, you have to place your funds on the line and different emotions may be tied to that trade. If you make a loss, you’d feel hurt and if you make a profit, you’d be ecstatic. But with paper trading, you may take risks that you may never take with real funds. 

Delay in Market feedback: Most paper trading platforms do not work in real-time. What this means is that trades may be slower than market pricing by 15 minutes or an hour. What this means is that a trader will not have the same experience trading with real-time software. 


While authentic trading will not leave room for mistakes, paper trading provides the basics for novice traders to learn before taking advanced trades. Paper trading is not restrictive to crypto trading alone and can be a traditional investment tool where a demo account enables trade practices. The best part of trading with a demo account is that some platforms offer these services for free such as Tradingview or eToro Virtual Portfolio Account. 

Also Read : How to start investing in Bitcoin in Nigeria


Rebecca Aseh

Oct 27, 2021

4 mins read

Join Newsletter

Sign up to our newsletter today to be on top of every development in the cryptoverse.

right arrow

Share Article

bitmama social

Copy Link

  • Company
  • About
  • Career
  • Privacy Policy
  • Terms of Service

Did you know you can do more with crypto while on the go?

Get Bitmama mobile app and find out


Fastest, Easiest and Cheapest way to buy cryptocurrencies.

Bitmama Google Play Store
Bitmama App Store
Bitmama facebook handle
Bitmama instagram handle
Bitmama twitter handle
Bitmama linkedin handle

Bitmama offers its products and services in partnership with licensed transmitters in their respective jurisdictions.

All trademarks and brand names belong to their respective owners. Use of these trademarks and brand names do not represent endorsement by or association with Bitmama.

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT: To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an Account. What this means for you: When you open an Account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see a copy of your driver’s license and/or International Passport.