Paper trading is forward testing: your strategy generates orders against live quotes, but fills are simulated (or routed to a broker's paper environment). It bridges the gap between a historical backtest and real capital.
Why paper trade?
- Validate automation - schedules, reconnects, and order sizing behave differently in production.
- Observe slippage - see how market orders interact with real spreads during your trade window.
- Build a track record - equity curves in paper are not investable performance, but they surface operational issues early.
Paper vs backtest
| Backtest | Paper | |
|---|---|---|
| Time | Historical | Live forward |
| Fills | Model-based | Broker or simulator rules |
| Best for | Research, parameter sweeps | Ops, scheduling, sanity checks |
A strategy that shines in a backtest can still fail paper if liquidity, timing, or corporate actions differ from your model.
What to monitor
- Did orders submit at the intended session time?
- Are position sizes within risk limits?
- Does cash and margin match expectations after fills?
- Are skipped trades logged with a clear reason?
When to go live
There is no universal rule. Many teams require a minimum paper period, stable metrics versus backtest expectations, and explicit max loss limits before enabling live trading.
Quantly offers automated paper execution on supported broker connections so you can run the same strategy tree you backtested. Join the waitlist for access or open the demo to see the workflow.
