Paper Trading
Running a strategy in simulation mode that tracks hypothetical trades and PnL without placing real orders or risking capital.
Definition
Paper trading is the practice of running a trading strategy in real-time market conditions but with simulated capital. The bot observes live prices, generates signals, and records hypothetical trades — without submitting any real orders. Unlike backtesting, paper trading uses real-time data and faces the same latency and execution conditions as live trading, making it a more realistic pre-deployment test.
In practice
All predtools bots default to paper-trading mode. When run without --live, each bot tracks a --sim-balance virtual balance (e.g., node poly5m/poly5m-v1.js --asset BTC --sim-balance 30) and logs all hypothetical trades, wins, and losses to a -simu.log file. The bot generates all the same Telegram alerts and PnL updates as in live mode, so the operator can evaluate real-time performance before committing funds. Paper trading does not capture all live risks (partial fills, slippage, API downtime), but it is the mandatory first step before --live deployment.