A Paper Trade refers to a method of practicing trading by using a brokerage firm’s demo account.
Demo accounts or practice accounts are offered by trading brokerage firms with a balance of virtual money. The trader can practice his trading or develop his trading strategies by using Paper Trades in the demo account. Paper trading in a demo account is usually done in real time and can provide the trader a realistic training platform in which to learn the fundamentals of the trading platform and market basics as they relate to successful trading. The theory with many trading training programs is that the beginning trader begins with Paper Trading until the trader becomes comfortable enough to trade with a “live” account and real money.