The Best Free Paper Trading Accounts and Stock Market Simulators
A free paper trading account or stock market simulator is an excellent alternative to a brokerage account and a significant advantage for investors in general, but it’s the ultimate benefit for any day trader. Whether you plan to trade stocks, futures, options, or forex – a paper trading account is the perfect tool in building a solid foundation for your successful career.
Many advantages come with paper trading and stock market simulators. There are also some major downsides you should be aware of. In this article, I will reveal the most important facts and list the most interesting demo accounts, free paper trading accounts, and stock market simulators available right now.
Transparency: We may get compensated when you click on links in this article.
1. Trade Ideas
Trade Ideas is located in California and was founded in 2003 and offers the best free day trading simulator, the best paper trading app, and the best paper trading platform. Based on Inc. 5000, Trade Ideas belongs to the fastest-growing companies in the United States. A 3-Year Growth of 124% shows that their products are precisely what traders and investors need.
Their artificial intelligence based stock scanner is one of a kind. At the end of 2019, they released their brand new simulated trading account fully integrated within Trade Ideas A.I. Today, the market simulator fully integrates with Interactive Brokers (direct access broker) and E-Trade (commission-free trading) accounts.
This is fascinating because you do not need a brokerage account for a real-time test drive in the markets. Yes, there are some brokerage companies that also allow virtual trading, but Trade Ideas goes one step further and enables you to automate your investment strategies.
Trade Ideas can be used to scan the markets based on specific criteria, and the platform will automatically execute trades once the criteria are met. On top of that, Trade Ideas lets you backtest trading strategies with just a few mouse clicks.
Day trading without human error, more efficient order processing, and being an all-in-one solution makes this the best free paper trading simulator available right now.
- Discount: 15% discount on all Trade Ideas plans
- Free Access: Free Trade Ideas trading chat room
- Free Stock Picks: Free Trade of the Week
If you are looking for a free paper trading account, you already made the right decision to practice your trading and investment activities before getting into it with real money. That’s great, and your chances of long-term profitability and success rise by going this path. A simulator helps you to make your first steps without risk. It helps you to test new trading strategies and to build confidence.
Topstep focuses on futures trading and forex trading simulation. This alone makes Topstep unique in this list since most brokers and tools focus on stock market simulators and ETF-paper investing.
But there is one thing that lets Topstep really stands out from all other solutions mentioned. Topstep funds you a real-money trading account if you make it through their Trading Combine and you can withdraw the majority of profits you make. The Trading Combine is all about trading based on a clear set of rules, so basically, it’s precisely the purpose of trading on paper, learn, trade, adopt.
Futures trading and forex trading is different from investing in stocks. That’s why Topstep also educates its students with videos, podcasts and blog posts. 97% of their funded traders say that Topstep improved their trading, and customers rate them 4.4/5 on Trustpilot.
Topstep funded 8,389 real-money trading accounts in 2021, and their traders withdrew $3,226,811 in that year alone.
- 20% discount on Topstep Futures on all account sizes
- 20% discount on Topstep Forex on all account sizes
TradingView offers a great simulated trading account that can be used for paper trading activities to practice investing and trading securities. The benefit of the paper trading module is that users can essentially trade in the same way as they would with real money. But instead of risking real money, they only risk the paper money while learning how to trade.
The TradingView system tracks all buy and sell orders, profit and loss, and order details. The account balance is pre-configured with $100,00, and users can reset the balance at any given time and start with any paper trading account value you like to define.
A cool paper trading account feature TradingView offers is chart trading. You can trade from any chart by hitting the buy and sell buttons which show the bid, ask and even the spread.
The order panel at the bottom of a chart lists the orders and current positions. Once a trade is opened, you can close or reverse a position right from the chart. Simulated paper trading is available with all TradingView accounts.
Webull’s investment app is the hottest competitor to Robinhood’s app and might be considered the best investment app right now. It has an excellent user interface, offers more functionalities, and it allows you to trade without any commissions.
Webull is a broker that does not charge any commissions for stocks and options.
They have included a paper trading account within their app. The Webull app can be used on your mobile, tablet, or personal computer. They still have a promotion where you receive free stocks worth up to $250 for opening an account.
With TradeStation, you can trade stocks and exchange trades funds commission-free by using their award-winning trading technology. TradeStation automatically routes your orders, executes your trades and confirms any trade execution fast.
While other online brokers offer free trading as well, TradeStation stands out with its trading platform. You can use TradeStation as a web application and app. But you can also install the software on your PC, which unleashes the full power. Traders can open multiple desktops and workspaces to apply charts, level 2, the Matrix-window, and Radarscreen features.
Users can also create custom trading strategies and trading indicators to let the system make the trades. This way, the emotional stress of trading gets reduced significantly. The TradeStation EasyLanguage is popular amongst traders, well documented, and you find many code snippets in forums, on YouTube and various trading coder sites.
TradeStation is particularly interesting for day traders looking for a good balance between zero commissions and high-end technology.
When you log in to TradeStation, you can choose between live-trading and simulated trading. The simulated trading feature is outstanding and allows you to do exactly the same things without the risk you would typically have in your live-trading environment. All level 1 data for U.S. stocks is provided in real time and comes without any additional fees.
This makes TradeStation an excellent choice for those who are serious about extensive testing, coding, trading systems, and low-cost trade executions.
You open an account and fund a minimum of $2,000 to access the account and the simulated trading environment. This may sound too complicated, but remember, if you use, for example, DAS Trader Pro for simulated trading, you need to pay $150 to them every month, and your money is gone. With TradeStation, you fund your account with $2,000, and you do not pay a monthly fee. So the $2,000 remains in your account, and you can test TradeStation with simulated trading as long as you wish.
TD Ameritrade provides their customers with one of the best paper trading platforms. It’s different from Trade Ideas because you need to open a brokerage account first, that is if you want to use the real-time data feed. If you are located in the United States, it should be a no-brainer when deciding whether to open an account with them or not since the minimum balance needed is $0.
You do not have to fund this account and you can use their trading platform thinkorswim with all of its features. This is a benefit compared to TradeStation since they want you to deposit $2,000 first. But TradeStation has the integrated automated trading and EasyLanguage coding capabilities. So it depends on your preferences if TradeStation or thinkorswim is the best paper trading platform for your needs.
This offer is fantastic for anyone who wants to learn how to trade using a simulator. Another benefit, the platforms and the data feed are entirely free of charge.
TD Ameritrade charges $0.0 in commissions for stocks and ETFs. Options trades are priced with $0.65 per contract with no assignment and no exercise fees. In 2020, TD Ameritrade and Charles Schwab merged and are now part of one company. They strive to diviver a best-in-class trading and investment experience for traders and investors.
Please note, TD Ameritrade is not available all over the world. Access to their platform thinkorswim is free to use and worth it! If you don’t want to open an account with them, you can also register for and practice virtual trading with a delayed data feed.
What Is a Paper Trading Account?
Now, let’s answer the question to “What is paper trading?” Paper trading is a risk-free approach to buying and selling your favorite stocks, options, and futures. The times of boring watchlists have long gone. Nowadays, powerful real time paper trading tools enable you to trade the markets as you would in a real account.
A good paper trading account provides you with the same functionalities and features as a real trading account. But there is one crucial difference.
You are day trading with virtual money instead of real money. Trading virtual money with a stock market simulator allows you to gain trading experience without risking your capital. You can paper trade stocks and some paper trading software tools allow paper trading options.
Must Have Functionalities of Any Paper Trading Account
- Charts: Visual confirmation is a must for any day trader and swing trader.
- Datafeed: Real-time, or at least near time, prices are helpful to simulate real market conditions as best as possible.
- Trade Reports: Important for documentation and the learning process. No trade reports, no good learning curve.
- Watchlist functionalities: List your most interesting stocks, options, and forex pairs in one table and compare them based on different columns like price, gain, change, gap, or volume.
- Low cost: Not really a functionality but a general rule of thumb.
- Optional: Backtesting capabilities: Actually, most demo accounts do not have this feature, but tools like NinjaTrader and Trade Ideas do. Backtesting strategies give you an immediate overview of the efficiency of a past strategy. This can help with evaluating the right strategy.
Important Differences between a Real Trading Account and Paper Trading
Your account will be funded with virtual money only. As with computer games, a virtual paper trading account has a major pitfall: computer games allow you to restart your game whenever you want.
Paper trading accounts provide a similar functionality and in most cases you can reset your account balance as often as you wish. Real life is different. If you lose money in real trading that means someone else has it.
In real trading, you cannot hit a magic button allowing you to reset your account. Instead, you have to put more funds into the account. Here are the most important differences between a real trading account and a demo account:
|Fact||Paper Trading Account||Real Trading Account|
|Deposit needed||typically not||x|
|Balance reset possible||x||–|
|Fees for Datafeeds||x (real time)||x|
*until the reset of your demo account or end of the demo account period.
Hint: A funded trading account like this one with a free trail is the combination of a paper trading account and a real trading account. Various funded trader programs offer people to trade an account of another company while keeping up to 80% of the profits.
What Accounts Should I Use for Day Trading?
Day trading platforms are designed for fast trade executions, flexible order routing scenarios and hotkey trading. They are all downloadable platforms for installation on a personal computer. Popular day trading platforms are Cobra TraderPro, DAS Trader Pro, and Sterling Trader Pro.
Our guide about the best day trading brokers explains the platforms in detail, while the article about the best direct access brokers and best brokers for short selling provides in-depth information about the specific requirements about the order routing and short selling processes.
How to Know What and When to Trade?
Trading strategies are one of the biggest hurdles for new traders. Where to start? What pattern to trade? When to buy and when to sell a stock?
Stock screeners like Trade Ideas Pro A.I. help you to have the right trade idea at the right time. Take a look at the trade ideas review to learn why Trade Ideas Pro A.I. is the perfect tool for any day trader and investor.
Advantages and Disadvantages in Using Paper Trading
4 Paper Trading Advantages
Perfect for Self-Learning
A paper trading account can give you a more realistic view of the financial markets than any trading course can. You will understand the market structure and price action.
Buying and selling stocks, options, forex, or even cryptocurrencies is dangerous for your pocket if you don’t know what you are doing. A stock market simulator protects you from any risk or losses.
Risk-Free Trading Strategy Exploration
Making money in the financial markets is not an unconscious action. You need a good trading strategy in order to make money. Most beginners are undecided about which way to go and often jump from one strategy to another.
With paper trading, strategies and trade ideas can be explored and tested without risks. Platform handling experience: You will learn the process of how trading works and become a master in handling the trading platform. This is a solid foundation for your trading career.
Using a trading platform from your online broker will provide advanced knowledge which will help you learn how to execute, buy, and sell orders right from the order screen within the platform. Once your paper trading account becomes a real trading account, this will be a huge benefit.
Losses are part of the game. Your trading strategy and preparedness could be as effective and perfect as possible, but there will be days when you have a bad performance and you feel everything went wrong.
During the learning phase, the demo account will prepare you to handle such losses. With the right strategy, you will gain more self-confidence when recovering from losses. Have a plan, stick to your plan, and trade with your plan.
3 Paper Trading Disadvantages
Not 100% Realistic Order Executions
The buy and sell orders you generate are not transmitted to the financial markets. Therefore, your orders do not have any impact on order executions and market liquidity. In real life, your orders will have an impact, and the order execution could be different. Usually, your paper trading account executions are declared more favorable than they would be in real trading accounts.
Fee Structure Not Transparent
Trading in real life will trigger fees that have to be paid to your broker, the stock exchange, the bank, and more. Your market simulator will never be 100% transparent and correct in terms of your total fees. Always expect that your fees will be higher once you trade for real.
Paper Trading Is Not 100% Free
The closer a paper trading account comes to realistic trading environments, the more expensive the demo account becomes. If you want to use real-time data, you have to pay for it. If you need a brokerage API for testing purposes, most vendors will charge a fee.
Completely “free” accessible demo accounts are full of advertisements to refinance the cost of the vendor or have only low-level functionalities and data. It’s an old saying but also a true one, “you get what you pay for.”
What Will Happen Once You Switch from Your Paper Trading Account to a Real Trading Account?
A general rule of thumb: If you don’t make money in your risk-free trading account, you will never do so in a real account. Once you make your way to a real trading account, you will be faced with even more challenges, making it harder to make money.
You know me. I always give you a clear and honest picture of trading and investing. Day trading is not easy, and you have to know what you are doing. Here are some of the challenges you will face when trading real money in your brokerage platform:
No Reset, Less Money
Many accounts come with a virtual amount of $100,000. The average amount of a real brokerage account is much lower. As a result, you will have less buying power.
When beginning, use the demo account settings to adjust the virtual money value as close as possible to your upcoming live trading value. And please be aware that you cannot reset your real money trading account with one mouse click. Only an additional deposit will give you extra funds.
Spreads Can Be Huge
A spread is the difference between Bid and Ask in the order book. Trading stocks or financial instruments with high spreads is not a good idea.
Within the paper trading account, you might get your order filled at a very unrealistic price level. In real life, you might not get an execution due to some order book magic. However, this part is complex, and I will dedicate a separate blog post to this topic.
Liquidity Can Limit Success
Within most free paper trading accounts, your buy and sell orders will be executed 100%, whether you order 1,000 stocks or 10,000. Market liquidity will be ignored in most simulated accounts.
Trading with real money will put you in a position in which your order will be filled only partially. Imagine you trade a stock that has an average trading volume of 20,000 stocks per day. You alone could generate a buy order of 10,000 stocks at the market open. Ouch!
Trading stocks, options, and futures as a primary instrument will put you in a comfortable situation so that in most cases a deal rejection would not come true.
If you consider CFDs for stocks, forex, or even binary options, then you will be faced with the deal rejection issue. Simply put, if the broker has a feeling you could get a price where he would lose money, then he will reject your order.
This happens because CFDs are not an original financial instrument and brokers want to protect themselves as much as possible. The best way to avoid such things is simple. Do not trade CFDs and other exotic financial instruments.
Interests, dividends, cash transactions, deposits, withdrawals, and many other services can cost additional money. It depends on your broker what additional costs could arise. Make sure to check the terms before you open a brokerage account.
You will experience less favorable order executions during real trading than you would during the demo account. The real market is harder than trading with virtual money. Using the right order types will protect you from uncalculated losses.
Final Thoughts on the Best Free Paper Trading Accounts
Day trading requires knowledge and a ton of practice. A demo account is a perfect choice for any beginner. Even experienced traders are sensible enough to use a demo account for evaluating new trading strategies.
As I mentioned above, using real-life to learn day trading, buying and selling stocks, options, futures, and other financial instruments will be extremely challenging. The paper trading account gives you the ability to gain experience in handling your trading platform, and it’s a great chance to practice the know-how you acquired while attending a trading course.
Wise preparation, including continuous development and improvement of skills, is essential for long term success. Once you are ready to trade with real money, you will be well prepared with the right trading strategies and loads of self-confidence. This is the perfect foundation for long term success when trading the financial markets with actual capital.
It doesn’t really matter whether you start with a demo account from an online broker or use a standalone trading tool. The most important thing is that you practice paper trading within a demo account or with a stock market simulator.
Plus, a stock screener like Trade Ideas helps you keep track of the financial markets right from the start and specifically search for stocks that meet your chosen strategy and selection criteria.