Crypto Paper Trading: The Best Way to Practice

Crypto is still a fairly new concept, and many of us don’t yet know all the ins and outs of it. For those of us new to crypto, we may not know how we want to invest. How much, what coin, and what trading strategy to use? Luckily, there is a way to play in the markets before buying in. 

Paper stock trading has long been a go-to option for traders, and crypto paper trading serves the same purpose for crypto. What is paper trading? Let’s look at what it is, some pros and cons, and how to get started.

What is Crypto Paper Trading?

Dipping our toes into a new market can be scary. We don’t know a whole lot about it yet, and we don’t want to lose a lot of money. Traditionally, the first step into the water for many new investors is paper trading. Paper trading is the act of simulating trades on paper, without putting any real cash on the line. Crypto paper trading is the exact same concept.

Crypto paper trading simulates real crypto trading and does so without risking any real money. Despite its name, most paper trading is done with technology these days. The same applications we use on the computer for crypto trading can be used for paper trading.

Benefits of Crypto Paper Trading for Beginners

Trading is much more of an art than a science. There are no hard and fast rules governing when the markets turn or when to make trades. We can research companies and watch for trends, but we ultimately buy and sell with our guts. We paper trade before putting real money on the line to see how our gut instincts are paying off. There are a number of benefits that come along with taking this test run before taking the plunge.

Paper Trading Carries No Risk

The biggest benefit of crypto paper trading has got to be that there is zero risk. If jumping right into trades presented no risk, there would be no reason for paper trading. Paper trading allows us to try our hand at trading without the possibility of losing any money. Taking the risk out of trading also eliminates stress, and being stress-free is the way to be when starting something new.

You Gain Valuable Experience

Engaging in all that hypothetical trading gives you some much-needed experience before you begin playing with real money. Reading up on crypto trading is one thing, but hands-on experience provides much more value. Paper trading allows you to see exactly what will happen when you make one move or another. That visual illustrates everything you’ve learned in a real life example. 

You Learn About the Market

Each crypto market has things that make it unique. If you don’t understand those differences, you may make poor decisions. Again, reading books and trade journals are incredibly useful ways to get started. But gaining experience by paper trading ties all that knowledge together.

Benefits of Crypto Paper Trading for Experienced Traders

The benefits of crypto paper trading aren’t reserved for beginners. Experienced traders can get good value from the practice as well. That’s because paper trading gives us a kind of sandbox for testing theories. Here are some benefits experienced traders can expect.

Try Before You Buy

Sometimes you’ve got some new ideas but want to test them out before risking big money. Paper trading is a great way to go. Testing your hunch with a hypothetical trade lets you see how well it would have paid off. If your hunch was wrong, you’ve lost nothing. If your hunch was right, maybe it’s time to put your money where your mouth is.

You Can Practice Different Trading Techniques

Sometimes we want to see how utilizing multiple strategies would work out for us. Crypto paper trading is a great way to do that. Paper trading allows us to try making risky moves without any real risk. If you feel like going in another direction with some trades, this is a great way to test your theory.


Some Crypto Paper Trading Downsides

As great as paper trading may be for gaining some experience, it isn’t all upsides. There are some aspects of paper trading you should be aware of. Here are a couple of ways paper trading can mildly distort your trading experience.

Distorted Sense of Security

When we aren’t playing with real money, we can make different decisions than we would otherwise. Have you ever played free poker and gone all in on a mediocre hand because no real money was wagered? It’s the same concept. Making trades with real money comes with more scrutiny and anxiety than trading with imaginary money does. Crypto paper trading gives us a lot of valuable experience. But know that you may make more conservative trades when real money is on the line.

Hypothetical Trades May Not Reflect Reality

This one piggybacks off the last. If you are free to make big bets with fake money, you can make a ton of money on paper. The problem is that you may not actually make the same trades with real money. When first-time investors see those huge hypothetical returns, they must be cautious not to get overzealous with investing their savings.

You Don’t Always See Fees Accurately

Making trades, whether crypto or otherwise, generally comes with some fees attached. Unfortunately, not all crypto paper trading platforms depict the fees you may be subject to accurately. The fees themselves are often small, but those small charges add up. If you get all your knowledge through paper trading, you may fail to take them into account on actual trades. Of the paper trading disadvantages we’ve covered, this one can sneak up on you.

Getting Into Crypto Paper Trading

If you’re ready to give paper trading a shot, there are much better ways to do it than scribbling hypothetical trades in your notebook. Technology has made it easier than ever. If you want to get the most out of the practice, you’ve got to go with a great company.

Finding a Crypto Paper Trading Company

The first step is to find a platform on which to try your hand at paper trading. There are a lot out there, so finding a great one is a worthwhile time investment. Look for a company with a robust set of features. 

Find a platform with a variety of tools

Some platforms are more useful than others when it comes to informing your trading decisions. Finding a platform with the best crypto trading tools will ensure you have the info you need to trade effectively.

Find a platform with great support

The best companies for beginners are those that offer great support. What is a paper portfolio? Do you know how to open a paper trading account? It’s helpful having someone to help answer any questions you have. When we can get that support within the platform, it makes crypto paper trading much more accessible.

Find a platform that offers paper trading and live trading

Once you’ve gotten the hang of trading through paper trades, you’ll probably want to make a real trade. If the platform on which you’re paper trading offers real trades, the transition is much more seamless. Start with a paper trading account, and flip to real money when you’re ready.

Find a platform that works with multiple markets

Once you start making trades, you may find that you want to diversify your portfolio. If the platform you choose offers paper futures trading or forex paper trading, you can test them out. If you like the idea of getting into futures or forex, you’ll be all set to do so.

Work with a Crypto Trading Mentor

A crypto trading mentor can answer the questions you have before they lead to mistakes. Making crypto trades without understanding the market can cost you big bucks. Maybe it’s someone you know who’s been trading in the crypto space for a few years. Maybe it’s someone you hire for their expertise. If you get lucky, you’ll get a great digital mentor with your crypto paper trading platform.

Get Started

Now that you know what is meant by paper trading, you’re ready to take a stab at crypto trading. Knowing you’re not on the hook for any losses is a huge bonus. Crypto paper trading will give you the knowledge and experience to make educated trades. Create a paper trading account and see how it’s done. The earlier you get started, the more potential is out there for you.


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