Paper trading to validate execution, not just strategy logic

A strategy can look great in a backtest and still fail in practice due to operational issues: unrealistic fills, brittle assumptions, or execution costs that only become obvious in a “live-ish” workflow. Paper trading is where you validate that your system can survive the real world.

Paper trading interface with live positions tracking and order execution monitoring

What paper trading reveals

• Execution friction: slippage/fees accumulate over time and can flip expectancy.
• Behavior under uncertainty: how the strategy reacts to gaps, spikes, and regime shifts.
• Risk discipline: whether position sizing rules actually keep drawdowns survivable.
• Operational reliability: monitoring, restarts, and state handling across sessions.

A simple paper-trading checklist

1. Start with 1–2 symbols and conservative risk sizing.
2. Run for long enough to see different regimes (trend + chop + volatility).
3. Compare signals vs fills and log any mismatch.
4. Only increase scope after stable behavior is repeatable.

Educational note: paper trading reduces risk while learning, but it can still differ from live execution.