Best Paper Trading Platforms In Canada
What You Should Know
- Paper trading allows you to track a hypothetical investment without investing real money.
- It often offers the same experience as real trading, but it does not involve money, so any gains or losses are hypothetical.
- Paper trading platforms allow you to test trading strategies without risking your money.
- The best paper trading platforms should have the functionality and the asset classes you require.
About Paper Trading Platforms
Any platform that allows you to track an asset’s performance can be used as a paper trading platform. Specialized paper trading platforms offer extensive trading tools that often include Copy trading strategies (e.g., replicating the trading behavior of others), algorithmic strategies, and other analytical tools. Depending on the trading platform, different assets may be offered to track. Some paper trading platforms also offer regular trading, while others may provide an integration with a third-party broker to trade on their platform.
Best Paper Trading Platforms in Canada
| Platform | Tradeable Assets | Services |
|---|---|---|
Interactive Brokers | Equities & ETFs (Global), Fixed Income (Global), Derivatives (Global), Forex | Real-Time Market Data, Analytical Tools, Market Research & News, Strategy Builder |
TradingView | Equities & ETFs (Global), Fixed Income (Global), Derivatives (Global), Cryptocurrencies, Forex | Real-Time Market Data, Analytical Tools, Market Research & News, Algorithmic Trading, Community & Chats |
Scotia iTRADE | Equities & ETFs (North America), Bonds (North America), GICs (Canada), Options (North America) | Real-Time Market Data, Analytical Tools, Market Research & News |
Webull | Equities & ETFs (U.S.), Options (U.S.) | Real-Time Market Data, Analytical Tools |
TradeZero | Equities & ETFs (U.S.), Options (U.S.) | Price: US$59/month, Short Selling Focused Tools, Analytical Tools |
StocksToTrade | Equities & ETFs (U.S.) | Real-Time Market Data, Analytical Tools, Market Research & News, Strategy Builder |
What Is Paper Trading?
Paper trading is a simulated trading environment that allows you to trade different assets with fake money. This way, you can practice trading without making or losing money. Even though paper trading is considered for novice traders, professional and algorithmic traders use it to test their strategies. You can use a paper trading account for the following reasons:
- Learn what trading is without investing real money.
- Analyze individual financial instruments and different asset classes.
- Compare the performance of trading strategies.
- Develop and test trading algorithms.
Paper trading is a safe way to introduce yourself to trading, analyze financial markets and trading strategies, and test your own trading algorithms. Once you feel comfortable trading using the strategy you develop, you should consider opening a cash account on one of the best trading platforms in Canada.
Pros & Cons of Paper Trading
| Advantages | Disadvantages |
|---|---|
| Risk-free trading environment to build skills and confidence. | No potential for financial gain. |
| Ideal for testing automated trading strategies. | Does not simulate the real trading environment due to the lack of the emotional factor. |
| A useful tool for individual asset and asset class analysis. |
How to Use a Paper Trading Account
Follow the following steps to set up your paper trading account and develop your trading strategies.
1. Pick a Paper Trading Platform
There are different paper trading platforms available for Canadians. You have to pick a trading platform based on your trading needs. A trading platform should have the assets you want to trade and the tools you want to use. Some of the most widely used and diverse trading platforms are Interactive Brokers and TradingView.
2. Register for a Paper Trading Account
Some paper trading platforms also offer cash accounts. Make sure you open a paper trading account, which is usually free and does not require any personal verification. Once you are registered, you should be able to access your trading account and the platform interface.
3. Understand the Interface
Trading interfaces may be overwhelming initially, but they will become very useful once you understand their functionality. Most trading platforms have a quick tutorial that walks you through the interface and helps you quickly start your journey. You may find more information on specific interface functions in documentation or online.
4. Develop a Strategy
Once you are familiar with the interface, you should devise a trading strategy. It may be as simple as investing and holding a single stock or as complex as engaging external algorithms to place orders. If your trading platform has the tools to run your strategy, you should utilize them.
5. Execute the Strategy
Once you have a clear strategy, you can place the trades accordingly. Depending on your strategy type, you may monitor and adjust it as needed or let it run without any changes.
6. Monitor Performance
Once the strategy is in place, you might want to check on the performance to analyze the strategy. If you monitor performance or have a tool to monitor performance, you can analyze and improve your strategy in the next iteration.
7. Analyze & Improve Your Strategy
It is important to analyze and improve your strategy to see better returns. This is an important step, as a faulty trading strategy may lead to large losses in real trading. You should spend as much time as you feel needed to perfect your trading strategy.
8. Trade With a Real Account
You can try your trading strategy with a real trading account when you are certain about your trading strategy. Even though it is similar to paper trading, you should be aware of the changes in your behaviour when trading real money compared to fake currency.
Disclaimer:
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