Cryptocurrency paper trading is the act of simulating crypto trades on demo accounts to avoid risking real money.

Paper trading goes back to an era when would-be traders practiced trading on paper before placing their bets with real money.

The game has changed. You and I are used to electronic trading platforms. And electronic demo accounts as well.

That’s because we live in a digital world. The platform may have changed, but the game of paper trading still needs to be played in the markets.

Do you think simulated trading is the same as real trading? Or if it is good enough for aspiring crypto investors, given the volatile nature of the crypto market?

If you are considering it, I think you should give it a shot. And here is why.

What is cryptocurrency paper trading?

Paper trading allows you to practice buying, selling, and trading cryptocurrencies without putting your money at risk. It is usually done using live market data on a real crypto exchange or broker.

Think of it as a practice match. It prepares you for what’s to come ahead. And more importantly, it affords you the chance to assess yourself and gauge if you are prepared for the rewards and risks that come with the territory.

The purpose of cryptocurrency paper trading is to see if your trading strategies are going to work in live trading. As a result, you need to practice under real market conditions to get the best results.

Trading is not easy. Business Insider says only 6% of traders make it to the professional level.

You should approach crypto paper trading with the same seriousness, astuteness, and sharpness you would if you were trading with real money.

I am sure you know by now that cryptocurrencies such as bitcoin and altcoins are highly volatile. This is good if you know how to handle the volatility. It is common for cryptoassets to surge more than 2,000% or 3,000% in 24 hours.

Crazy, right? Maybe.

Cryptocurrency paper trading should help you get a grip of concepts such as stop-loss, limit orders, so forth.

Demo accounts come with virtual cash to use during your learning curve. Treat it like real cash and look after it as if your life depends on it. Ok, your life doesn’t depend on it but you get the point.

You should take crypto paper trading seriously because it has several advantages.

What are the pros and cons of crypto paper trading?

There is an upside to cryptocurrency paper trading. Firstly, you don’t stand to lose anything. In fact, you have everything to gain from it.

It’s as good as kindergarten or pre-school. But for traders. And not toddlers. Unless if you are a ‘toddler hodler.’

I will start with the cons of crypto paper trading. Here they are.


This should be crystal clear because after all, the purpose of simulated trading is to take away the risk from the equation.

You do not risk real money with paper trading. There are no payments you make to the broker.

You are simply playing around with virtual money and the market. But you could well be playing with real money.


Trading involves money and generally evokes greed and fear. These emotions can ruin your entire trading portfolio if you don’t keep them in check.

Paper trading removes these emotions and paves way for proper risk management in cryptocurrency trading.

It allows you to focus on the bigger picture without worrying about losing money or making it.

All you have to keep your eyes on is developing a good trading strategy.

Practice, practice

Paper trading cryptocurrencies gains you valuable experience. Crypto assets are very volatile as they can quickly go up or down.

Simulated cryptocurrency trading helps you to cool your nerves. It controls your emotions.

Most importantly, it will be good for you to know how the market moves before you splash your money in crypto trading.

Confidence builder

You will likely lose money in your trading journey. It could take a big knock on your confidence, which is an important ingredient for your trading success.

Cryptocurrency paper trading gives you the confidence you need to start trading. The simulated wins give you more willpower to become a trader. The paper losses strengthen your resolve as a trader.

Data collection

Paper trading crypto for a few weeks up to a month helps to collect sufficient data and information to develop your trading strategy.

It gives you an idea of how the market reacts under certain conditions. The paper trading period gives you an idea of what works in your technical or fundamental analysis of different tokens.

Cryptocurrency paper trading cons

It is a good idea to use cryptocurrency trading paper trading apps to develop your skin in the game.

But sometimes, it does not give you the knowledge and experience you are hoping for. And this has nothing to do with you or the apps you are using. It’s just the nature of the game.

Here are some drawbacks of crypto paper trading:

No control over your emotions

Crypto paper trading does not involve real money. It’s a practice game with no consequences on your outcome.

It’s like playing a racing game. You can drive at high speeds knowing that the accident you are involved in is not real. The car that gets damaged, aka ‘totaled’ is not yours.

This is what happens with crypto paper trading. Your emotions (fear and greed) are not fully factored in.

And when you go to real trading, you realize that the stacks are different. Losing real money is not the same as losing virtual money that you can easily reset to default settings.


Paper trading throws you in a perfect world where there are no extra costs. However, this is not the same as real trading.

You have to pay trading fees which could affect your entry points or profit/loss at the end of the day.

In the real world, you will spend some money on fees that you may not realize.

Ideal trading

Crypto paper trading will see you make ideal trades. You will likely make perfect entry and exit positions, giving you the confidence that you are ready to trade.

However, this is not the case in the real world. It is easy for you to make simulated trades that you wouldn’t otherwise make if real money was at stake.

What are cryptocurrency paper trading apps?

Crypto paper trading apps are apps that you can use to aid you in simulated trading. In most cases, exchanges or brokers offer demo accounts that should work as paper trading apps.

There are several paper trading apps in the crypto industry. While they may be designed differently, the similarity lies in the end goal: teaching you to trade without using real money.

Some apps will always be better than others. But the truth is that they are just tools. It all depends on you utilize them.

Final thoughts on cryptocurrency paper trading

Crypto paper trading is great for first-traders who want to get a feel of the brutality and pleasures of trading the market.

While it is a good way to get started, you should know that it is different from real trading. Take the knowledge you gained from cryptocurrency paper trading and use it as a base for your strategies.

But even then, you should never stop learning because there is no universal answer to winning against the markets.

Simulated trading is the first step. The actual job is done with actual money.

A war is fought, won, or lost in the real battleground. What you do in training is just that: training.

Contact us

Find us at the office

Trailor- Verkamp street no. 63, 81415 Zagreb, Croatia

Give us a ring

Dezha Manci
+38 695 645 231
Mon - Fri, 8:00-22:00

Reach out