Can You Paper Trade When the Market Is Closed? Find
Trading is a great place to turn your $100 into a thousand, a thousand into many more. However, there are also chances of turning $100 into zero due to potential risk.
Thus, proper practice is a must; you can do so with paper trading. Wait, you don’t know what paper trading is? Not to worry, in this blog, we will discuss paper trading and find out: can you paper trade when the market is closed?
What is Paper Trading?
Paper trading, also known as simulated trading, allows you to trade within real market conditions but with fake money. Paper trading replicates the same live market conditions to give the traders real experience to enable them to learn trading without taking any risk.
The term “paper trading” originates from the traditional trading approach when traders or investors used to practice trading on paper to learn.
However, now with the advancement of online trading, there are numerous platforms that allow you to practice paper trading for free.
Here's a quick look at what you'll read
Yes, you can paper trade when the market is closed on platforms such as TradingView and Webull.
Yes, modern paper trading even works after the market hours.
The 90% rule states that 90% of new traders lose 90% of their capital in the first 90 days.
You can paper trade by using a stock market simulator or a brokerage platform’s demo account to practice trading with virtual money.
Can You Paper Trade When the Market Is Closed?
Paper trading replicates real trading, so earlier it was not possible to paper trade when markets were closed, especially in markets with specific hours in a day, like the stock market.
However, with the advancement of technology, many new platforms now allow traders to trade even when the market is closed. So, yes, you can paper trade when the market is closed. On paper trading market close apps such as TradingView and Webull, you can trade even after the market closing hours.
So, global traders can learn trading at their preferred time. Just search “paper trading TradingView free” or any other platform, register yourself, and start trading. However, when trading after market hours, the platform may not replicate the conditions efficiently.
Objectives of Paper Trading
- Learn trading in forex, stock, crypto, or any other financial market without risking a single penny on TradingView paper trading and similar apps.
- Theoretical knowledge of trading and actually executing trades are two very different things. Paper trading aims to provide real market experience to traders.
- Gain practical knowledge of fundamental, technical, and sentimental analysis tools to identify and trade opportunities.
- Understand how buying and selling take place with diverse order types, lot sizes, and time frames.
- Master complex topics such as risk management, leverage usage, volatility trading, backtesting, and many more.
- Learn using trading charts with technical analysis indicators, analyzing trends, and identifying key support and resistance levels.
Benefits of Paper Trading
Before understanding if you can paper trade when the market is closed, let us first find out what makes paper trading so attractive. While there are numerous benefits, let us see the major ones:
Zero Risk Trading
The risk-taking ability is quite rare in people. Most people are so afraid of risk that they don’t even think of starting trading. However, paper trading allows you to trade with zero risk. That means you will learn how the market works and find out whether trading is suitable for you or not without even risking a single penny.
Try and Test Strategies
In trading, you can be a scalper and make a profit within seconds, or you can even go for position trading and hold your position for months. You can choose buying and selling assets from multiple methods.
However, how will you determine whether a long-term or short-term, aggressive or conservative, technical or fundamental analysis strategy works for you? The answer is paper trading. A paper trading app allows you to try and test diverse strategies and choose the best based on trade results.
Master Using Trading Tools
In trading, you need to use diverse types of tools. It can include technical analysis tools such as charts or indicators, fundamental analysis tools such as an economic calendar, automated tools such as expert advisors, software, and bots.
Using these tools directly on a real account is not a great idea and may lead to losses at the initial stage. However, with paper trading, traders can learn using diverse trading tools.
Performance Analysis
Your profit or loss determines your trading performance and accuracy. The greater the profit, the better the strategy, while a big loss indicates your strategy needs to change.
Risking your hard-earned money to check the effectiveness of your strategy is not a great idea. With paper trading, although the profit or loss is virtual, it provides insights into your performance. Also, you can identify the scope of changes to increase profitability.
Learn Portfolio Diversification
Traders can not only learn risk management but also spread the risk into diverse assets with paper trading. According to the trading rules, the risk is less when you spread your capital into diverse assets.
The fundamental concepts of trading are the same. However, each market and trading instrument is different. So you can learn about a variety of trading assets and how to trade them by practicing paper trading.
Cons of Paper Trading
Paper trading does have some limitations, and these limitations may affect the entire process result. So you must know them before starting paper trading. Let us explore its limitations:
No Psychological Stress
When staking your hard-earned money, attaching emotions is natural. Real traders are affected by greed, FOMO, anger, frustration, and many other emotions. And if you suffer losses, then it has a significant impact on your mental state, which leads to impulsive trade decisions.
However, with paper trading, you know that profit or loss is virtual. So it has a negligible impact on your trading psychology. And this is when paper trading loses its effectiveness.
Ignores Market Inefficiency
When trading in a live market, experiencing price gaps or slippage is common. The price inefficiency affects your trades. However, paper trading is not perfect in replicating these inefficiencies. Especially when paper trading market closes, the conditions are not well replicated.
Time Limitations
Although paper trading is free, even paper trading during market close is free, most platforms have time limitations. Traders can practice paper trading for a limited period; after that, they need to open a real account. So, ultimately, you have limited time to learn.
Paper Trading vs Real Trading: Comparison
Final Words
Paper trading is a great way for beginners to learn and for experienced traders to try and test strategies. It can boost the trading outcome, improve execution, transform analytical strategy, and customize the plan. It may have some limitations, but even after that, it is quite useful. And if you are new, it is a must to try paper trading. You can even practice paper trading when the market closes,
Also, after practicing paper trading, when starting real trading, you may experience some problems. So you can even seek the assistance of Carlos and Company. We provide daily trade analysis and alerts to help traders in planning and executing their trades. Feel free to get in touch to try our demo trades.