Best Paper Trading Options Platforms

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Contributor, Benzinga
February 23, 2024

Benzinga readers often choose Interactive Brokers & moomoo 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 using an online 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 platform that allows you to paper trade online would suit you best.

Quick Look at the Best Paper Options Trading Platforms:

Best Online Paper Trading Platforms

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.

1. Best for Active and Global Traders: Interactive Brokers

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

Pros

  • IBKR offers paper trading on a large scale that can help you see the long-term impact of your investment choices
  • The Paper Trader has all the tools you should expect to see on the platform, meaning you can truly practice
  • IBKR is highly regarded as an exceptional online paper trading learning platform

Cons

  • IBKR can offer a wide range of tools and support, but that might feel like a bit much for some investors

2. Best for Traders of All Levels: moomoo

Moomoo is an intuitive investment and trading platform with easy-to-use and professional tools, data, and insights that equal a pro-level trading experience for all traders, no matter their level of expertise, especially because you can paper trade as you practice for live trading in the future. 

When you open a brokerage account with Moomoo Financial Inc, features will include:

  • Real-time Level 2 stock and options market data for funded accounts
  • Advanced technical indicators 
  • Unique charting tools
  • Advanced options orders
  • Full extended trading hours from 4 AM to 8 PM EST 
  • Multi-market quoting
  • Low fees, $0 commission on U.S. Stocks and ETFs, along with $0 equity options contract fees
  • 5.1% APY in the Cash sweep program and a 3.0% boost for qualified customers

Users can reach out to the Moomoo customer support team by phone during trading hours or via email. FAQs in the Help Center can also answer specific questions.

The site and app also helps users learn with a nice educational offering and a community with more than 20 million users worldwide.

Pros

  • Commission-free trading 
  • A competitive 6.8% margin rate
  • 5.1% APY in the Cash Sweep program for new and qualified customers
  • Free Level 2 data for funded brokerage accounts
  • Advanced charting tools with 100+ indicators, 37+ drawing tools and 20 candle patterns
  • Extended trading hours for all users and 24/7 chat support
  • No minimum deposit to open an account

Cons

  • No fractional stocks 
  • No crypto
  • No support for mutual funds or retirement accounts

3. Best for Copy Trading: eToro

  • eToro Stocks
    Best For:
    Demo Accounts
    securely through eToro Stocks's website

    eToros securities trading offered by eToro Securities, Inc, (“the BD”), member of FINRA and SIPC. Investing involves risk.

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.

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 no management fees, making it even cheaper to add to your portfolio.

Pros

  • eToro focuses heavily on the modern, new trader, helping you learn more about investing
  • Several available assets on the platform make online paper trading more effective
  • You can use eToro on your browser and transition to the mobile app

Cons

  • Services that do incur fees could add up quickly

***Disclaimer: eToro securities trading offered by eToro Securities, Inc. (“the BD”), member of FINRA and SIPC. Investing involves risk and content is provided for educational purposes only, does not imply a recommendation and is not a guarantee of future performance.

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 an online 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.

Pros

  • Commissions and fees are low, meaning that you can start saving money once you’ve practiced as a paper trader
  • The API integration technology is powerful in that it helps you connect to the places where you prefer to invest

Cons

  • Platform integration may overcomplicate online paper trading for beginners

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 online 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 tradable assets and charges $0 commissions on stocks and most ETFs.

Pros

  • The large range of tradable assets makes it much easier to invest in a diverse portfolio
  • You can paper trade on this platform before deciding what type of account you prefer to maintain

Cons

  • This is a choice platform for professional traders, and may not be the best starting online paper trading platform.  
  • Not all assets are free

6. Best for Short Selling: TradeZero

TradeZero ensures that you can trade both on your desktop and mobile devices. The online trading platform offers free trading options, and you can also take advantage of low fees for other trades.

Dedicated 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 use free limit orders and no pattern trading rules to invest with the strategy you prefer.

Pros

  • The low pro account fee helps you get the support you need without overspending on that support
  • You can paper trade here and get customer support at the same time, learning how best to manage your portfolio
  • There’s no urgent need to step up to a Pro account if you don’t want to

Cons

  • Even though the platform offers 24/7 support, there’s no guarantee that you can reach the exact person you wish to speak with when you reach out to the platform

7. Best for Beginners: Webull

Webull was designed to make options trading easier for investors, using AI and machine learning technologies to produce better strategies. Plus, you get recommendations for trades made by professionals, allowing you to take a profitable path to focus on income generation, increasing profits, or specific entries into the market. 

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

As a part of the refining process, you can use online 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.

Pros

  • Use over 50 technical indicators and 12 charting tools to plan each trade
  • You can learn quite a bit about the options market before you invest your hard-earned money

Cons

  • Webull does not offer mutual funds
  • Crypto trading is now on a separate app

What is Online 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 money to the activity. New options traders can learn basic strategies through online 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 online 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 Online Paper Trading

Paper trading can offer considerable benefits to new and seasoned traders. However, some key limitations to online 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. Without the fear of losing money, the paper trader can concentrate on risk management and how their positions behave in the market without being influenced by the emotional element of trading. 
  • No risk: Since online paper trading does not require funding of any kind, you cannot lose money from poor paper trading decisions, a bad strategy or unfortunate market timing. By eliminating the financial risk factor, paper trading online 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 online 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 process allows you to find and address weaknesses in the strategy and lets you to make appropriate changes to enhance your strategy’s success.

Cons

  • Risk-taking differences: Paper trading online 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. At the same time, losses can also lose their emotional sting since only virtual money is being lost.
  • Lack of accuracy: Since online paper trading involves using only virtual money, dealing spreads may not be as accurate as you would experience when trading in a live account.
  • Missed market correlations: When online 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 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 because of 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 online paper trading may be less than accurate. 

Who Should Try Online Paper Trading?

People who would most benefit from online 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.
  • Traders with little experience: Many traders and investors have little or no options trading experience. These market participants could benefit 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 Online 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 thinkorswim platform from TD Ameritrade (owned by Schwab) to get started with online 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 or find the best online stock trading platforms or best day trading platforms here.

Frequently Asked Questions

Q

Is paper trading a good way to learn?

A

Paper trading can certainly enhance your skills as a trader, allow you to practice, help you become more familiar with a market and highlight potential trading issues, so it is a great way to learn how to trade. The more familiar you become with any market, the more likely you will be able to trade that market profitably. However, your experience trading in a virtual account may differ from trading in a live account for several reasons.

Q

Can you make money from paper trading?

A

No, you cannot make money by paper trading, although you can develop a successful track record. You can also make money by applying the knowledge you gained from paper trading in a live account.

Q

What platforms can you paper trade on?

A

Virtual paper trading is another name for online paper trading. It allows you to simulate real-world values and price movements of stocks to practice trading using virtual money.

Q

What is virtual paper trading?

A

Interactive Brokers, eToro and TD Ameritrade (owned by Schwab) are all great broker options for paper trading.

Q

Is paper trading free?

A

While there’s no possibility of losing money from trades, not all online paper trading is free. Some online paper trading platforms require a fee for certain trades or to access the trading platform.

Q

Is paper trading legit?

A

Online paper trading is an effective training tool. However, it does not necessarily simulate real market situations as some traders may be more susceptible to emotional decision-making when actual money is involved. Likewise, some traders may be susceptible to euphoric trading, taking exceptional risks with paper trading, especially if they have large accounts.

About Alison Plaut

Alison Plaut is a personal finance and investing writer with a sustainable MBA, passionate about helping people learn more about sustainable investing and long-term wealth building for financial freedom. She has more than 17 years of writing experience, focused on investments, business, personal finance, and real estate. Her work has been published in The Motley Fool, MoneyLion, and regularly appears on Benzinga.