STAGE 6 · LESSON 1 OF 5

Simulation is training, not live evidence

Paper trading is useful, but the assumptions and emotions differ from a funded position.

THE IDEA~8–12 MINUTES

Understand it

Simulation helps test order-entry skills, routine adherence and repeatability without risking capital. However, some simulators simplify fills, spreads, queue position, latency or market impact. Emotional reactions also differ when money is at stake. Treat simulation results as hypothetical and label them clearly. For any strategy evaluation, keep the simulated evidence separate from actual brokerage records.

WORKED EXAMPLE

A simulator may fill a limit order whenever the last traded price touches the limit. In a real order book, other orders may have priority and the same order may remain unfilled.

Watch for this misconception

Presenting profitable paper results as equivalent to verified live performance.

PRACTICE EXERCISE

Identify three factors a simulator may not accurately reproduce in your intended market.

Readiness checklist ↗
KNOWLEDGE CHECK

What does profitable simulated trading establish?

Select the best answer

Check the sources

Hypothetical educational examples. Verify current product specifications and rules before making decisions.