Paper Trading vs. Live Trading
At MarketQuants, we highly recommend that all new users start their journey with Paper Trading. This allows you to get familiar with our tools and test your strategies without any financial risk.
What is Paper Trading?
Alpaca’s Paper Trading Platform provides a real-time simulation environment where you can test your algorithms and portfolio strategies. It simulates the trading experience as closely as possible to the real world, but with virtual money.
Key Features
- Real-Time Simulation: Identify potential issues in your strategy in advance.
- Virtual Execution: Orders are not routed to real exchanges. Instead, the system simulates order filling based on real-time market quotes.
- Risk-Free: Account balance and performance numbers are calculated with play money, so mistakes don't cost you a cent.
While Alpaca’s Paper Trading Platform makes a best effort to simulate real market behavior, execution in active markets may vary from a live environment (e.g., slippage or fill times).
Live Trading
Live Trading involves real capital and real risk. Orders are routed to actual exchanges, and your gains and losses are real.
Comparison
| Feature | Paper Trading | Live Trading |
|---|---|---|
| Capital | Virtual ($100k Default) | Real Money |
| Risk | None | Real Financial Risk |
| Data | Real-Time Market Data | Real-Time Market Data |
| Execution | Simulated | Real Market Routing |
| KYC | Not Required | Required (ID, SSN, etc.) |
Recommendation
Start with Paper. Even experienced traders use paper accounts to test new theories. Switch to Live Trading only when you are comfortable with the MarketQuants interface and confident in your strategy's performance.