Best Paper Trading Platforms

Benzinga readers often choose Interactive Brokers & eToro as the best paper trading options

At one time, and because of the risk management challenges involved, listed options trading was mostly done by professionals and market makers with limited public participation. Today, you can open an online options trading account and learn options trading via Internet courses.

Although the risks remain the same, you can refine your knowledge of options trading by using a paper trading options simulator that lets you practice without committing any funds much like you might use a forex broker’s demo account. Keep reading to find out which paper trading options platform would suit you best. 

The Best Platforms for Paper Trading Options

Several online brokerages offer paper trading platforms. Each broker has different requirements and offerings, so you should choose the broker that best fits your situation and needs carefully. Below are listed Benzinga’s picks for the best platforms for paper trading.

• Best for Active and Global Traders: Interactive Brokers
• Best for Copy Trading: eToro
• Best Mobile Platform: TD Ameritrade
• Best for Options Trading: Tradier
• Best for Professional Traders: TradeStation
• Best for Short Selling: TradeZero
• Best for Beginners: Olive Invest

1. Best for Active and Global Traders: Interactive Brokers

Interactive Brokers’ Trader Workstation (TWS) is one of the most advanced trading platforms you can find online. The platform offers hundreds of tools for technical analysis capable of analyzing a wide range of markets and tradeable assets. Interactive’s TWS Paper Trader virtual trading platform offers almost all of the features of the TWS platform and lets you begin paper trading with $1,000,000 in virtual money. 

2. Best for Copy Trading: eToro

eToro is one of the largest and most prominent online brokers in the world. However, eToro does more by allowing you to copy the trades of the best investors, using social trading to your advantage.

The CopyTrader feature allows you to copy the buy and sell orders of known crypto professionals, allowing you to learn how to trade and benefit from their expertise. Prices with eToro are competitive, and the platform offers several educational options that help you learn how the markets work.

Plus, you can use the CopyTrader feature along with other self-directed options that help you add more diversity to your portfolio. Remember, with the CopyTrader, there are also no management fees, making it even cheaper to add to your portfolio.

3. Best Mobile Platform: Thinkorswim by TD Ameritrade

The impressive thinkorswim trading platform by TD Ameritrade offers 2 different paper trading accounts. One consists of a standard margin trading account, while the other is an individual retirement account (IRA) more suitable for investors. Both paper trading accounts come funded with $100,000 of virtual money. 

The thinkorswim platform is one of the most sophisticated option trading platforms in the business, and those with paper-trading accounts get access to most of the features traders with live accounts to enjoy.

4. Best for Options Trading: Tradier

Tradier uses application programming interface (API) technology to give you access to several different options trading software and platform choices, including a paper trading choice.

With Tradier, you’re not locked into only one platform, so you can integrate other platforms into your Tradier workstation while taking advantage of Tradier’s low commissions and fees.

5. Best for Professional Traders: TradeStation

Once the platform of choice for many professional traders, TradeStation’s GO account offers new traders access to most of the same stock screeners and features of their professional platform, also available on their paper trading platform. 

The broker also offers extensive educational and developmental tools to help new traders excel in their trading. TradeStation offers a wide range of tradeable assets and charges $0 commissions on stocks and most ETFs.  

6. Best for Short Selling: TradeZero

When you are looking for an online trading platform, TradeZero ensures that you can trade both on your desktop or mobile device. Free trading options are available, and you can also take advantage of low fees for other trades.

24/7 customer support is available along with a secure platform that adheres to all federal standards. You can invest using the free app, or you can move up to a Pro account for $59 per month. There are powerful charting and technical analysis options, and you can even use free limit orders along with no pattern trading rules to invest with the strategy you prefer.

7. Best for Beginners: Olive Invest

Olive Invest was designed to make options trading easier for the investor, using AI and machine learning technologies to produce better strategies. You don’t have to do the math when Olive can do it for. Plus, you get recommendations for trades made by professionals, allowing you to take a profitable path so that you can focus on income generation, increasing profits or specific entries into the market. 

Best for beginners, anyone can use this platform to refine their options trades. Additionally, there are several educational tools on the site that teach you about the options market—one that’s often misunderstood by the public.

As a part of the refining process, you can use paper trading to study, learn and practice how you would prefer to make investments. This is an important part of any trading journey because it teaches you what a real world situation would look like without putting up your own money.

Remember, Olive Invest isn’t a brokerage. You connect through a secure API to your broker and make trades based on the recommendations you get. After a 2-week trial, you can purchase access to Olive for a monthly or yearly rate in an effort to improve your portfolio.

What is Paper Trading?

Paper trading dates back to well before the advent of online trading, and the activity’s name reflects how traders would practice writing trades on paper before committing any money to the activity. New options traders can learn basic strategies through paper trading, while seasoned traders sometimes paper trade to test new options positions and strategies.

In practice, paper trading traditionally consisted of writing down hypothetical buy and sell decisions on a piece of paper instead of actually placing real trade orders through a broker. This process was as simple as jotting down trades in a notepad or using a spreadsheet to enter trades and then analyze positions.

With today’s technology, traders can paper trade options using either a market simulator or real-time market prices and software that emulates a trading platform. A modern options paper trading platform typically lets options traders enter and exit the market and assess their net positions virtually in real-time. This process provides a useful practice opportunity, as well as important insights into how their trading strategy and virtual options positions would perform in an actual funded account.  

Pros and Cons of Paper Trading

Paper trading can offer considerable benefits to new and seasoned traders alike, although some key limitations to paper trading could become evident once the trader begins to operate in a funded account. Benzinga has listed below some of the pros and cons of paper trading that you might want to become familiar with before opening a virtual options trading account: 

Pros

• Lack of stress: Because you don’t have any funds committed to your trading, you usually won’t be affected by the two most common emotions involved in trading: fear and greed. Due to the lack of pesky emotions, such as the fear of losing money, the paper trader can concentrate on risk management and how their positions behave in the market without being as influenced by the emotional element of trading. 
• No risk: Since paper trading does not require funding of any kind, you cannot lose money from poor paper trading decisions, a bad strategy and/or unfortunate market timing. By eliminating the financial risk factor, paper trading allows you to analyze the flaws in your trading process and hone your strategy further. This can give you an edge that you can later benefit from when trading in a funded account. 
• Practice: Practicing option trading in a virtual account gives you considerable insight into how you and your strategy will behave when operating in a live funded account. By paper trading on an options trading platform, you’ll gain experience in all aspects of trading, including making trading decisions, entering orders, timing and establishing positions, managing risk, and taking profits or losses as you close positions out. 
• Confidence: Making virtual money from trading complex options positions can give novice options traders more confidence when trading in a live account. One of the key elements to successful trading is feeling secure in your trading decisions, so developing confidence in a paper trading account can benefit you when trading in a live account.
• Statistics: Trading for a month or more in a virtual account will generate realistic statistics about your chosen strategy so you can determine whether it is likely to be profitable or not. This allows you to find and address weaknesses in the strategy and gives you the opportunity to make appropriate changes to enhance your strategy’s success.

Cons

• Emotional and risk-taking differences: Paper trading allows traders to take risks they would not otherwise consider since no monetary gain or loss is involved. Traders using a virtual account may expand their profits with little consideration of the actual risk of loss they take with a funded account, while losses can also lose their emotional sting since only virtual money is being lost.
• Lack of dealing spread accuracy: Since paper trading involves using only virtual money, dealing spreads may not be as accurate as you would experience when trading in a live account.
• Overlook market correlations: When paper trading individual stocks and options, a trader might overlook the influence of the broader stock market that can occur when volatility increases. Results obtained trading individual stock options in a real trading environment may therefore differ due to stock market correlations. 
• Unrealistically easy execution: Trading on paper lets you quickly pick your position entry and exit points, but this might not happen as smoothly when you go to execute a real trade due to slippage and requotes. Markets can also shift direction without warning as economic information is released or when large transactions are executed. Unless you use a no-slippage broker, there is no way to know what kind of slippage your orders might experience, so the results of paper trading may be less than accurate. 

Who Should Try Paper Trading?

People who would most benefit from paper trading options include:

• New traders: People with no experience in the market would gain invaluable trading experience by paper trading for several months or more. The experience and knowledge gained after paper trading could prepare a novice for trading options in a live, funded account.
• Those with no options experience: Many traders and investors have little or no options trading experience. These market participants could benefit considerably from paper trading using an options simulator to practice before starting to trade in a live brokerage account. 
• Experienced options traders: Traders with experience could paper trade to test new options strategies, try out a different underlying market, or see how an existing options trading plan might perform under different market conditions. 

Sharpening Your Trading Skills

Benzinga has presented above some of the best options for trading options in a virtual account, although the best broker to choose will depend largely on your financial situation and your specific needs and preferences as an options trader. 

For example, if you want to trade options on multiple assets actively in several world markets, then Interactive Brokers could work better for you than other platforms. On the other hand, if you want to learn how to use one of the very best online option trading platforms available, you could gravitate toward using the very impressive thinkorswim platform from TD Ameritrade to get started paper trading options.

For more information about the pros and cons of individual option brokers and their trading platforms, you can check out Benzinga’s best options broker review.

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