# Paper trading: run a strategy with pretend money

> Paper trade a whole strategy with pretend money at real prices. It runs by itself each trading day and emails you after the close. Free while we build.

Written by [Tactfolio research team](https://tactfolio.com/about/editorial-policy.md), published 2026-10-16, updated 2026-10-16.

Paper trading means trading with pretend money at real market prices. On
Tactfolio, a paper account runs one of your strategies by itself and emails
you a summary after each close. When you are ready, the same strategy can run
in your own Alpaca account.

- A Tactfolio paper account follows a strategy's rules, not your clicks. It is
  not a click-to-buy game.
- A stock and ETF account checks the rules once each trading day, shortly
  before the US market closes, and trades only when the rules call for it.
- Fills use real market prices, moved by the slippage you set. Splits and
  dividends are counted.
- It is free while we build. It covers US-listed stocks and ETFs, long only.
- It also covers Hyperliquid crypto perps, such as BTC. Those are backtest and
  paper or testnet only. Real-money crypto trading is not available yet.

## What is paper trading?

Paper trading is practice trading with fake money. The name comes from the
days when people wrote their trades down on paper to track them. Today many
brokers offer a paper account. [Alpaca](https://docs.alpaca.markets/docs/paper-trading),
for example, gives users a paper account that fills pretend orders at real
quotes.

Paper trading lets you learn how a plan feels before your own money is on the
line. A mistake costs nothing.

It has limits too. Pretend money feels different from real money. Real orders
can fill at worse prices, or not fill at all. A good paper record is not a
promise of a good real one.

## Paper trading a strategy vs clicking buy and sell

Most paper trading tools let you click buy and sell by hand. That teaches you
how you trade. A Tactfolio paper account teaches you how a set of rules
trades, because the rules make every decision.

| | Manual paper trading | Tactfolio paper account |
| --- | --- | --- |
| Who decides each trade | You, every time | Your strategy's rules |
| When it trades | Whenever you click | Near the close, when the rules say so |
| What you learn | How you react to the market | How a rule set behaves on new prices |
| What you need to do each day | Watch and click | Read the daily email, if you like |
| Moving to real money | Start again by hand | Run the same strategy in your Alpaca account |

If you want to practice clicking buy and sell, a broker's paper account is the
better fit. If you want to see whether a plan holds up, paper trade the plan.

## How a Tactfolio paper account works

1. **Pick a strategy.** Build your own in the [builder](https://tactfolio.com/builder), copy a
   [classic strategy](https://tactfolio.com/strategies/classics.md), or copy one from
   [Discover](https://tactfolio.com/strategies).
2. **Create a paper account in Trade.** Give it a name and a starting balance.
   You need a free Tactfolio account. No broker account is needed.
3. **Start trading.** The account follows your strategy from the next close.
   About 15 minutes before the US market closes, it checks the rules. If they
   call for a change, it trades at that moment's price.
4. **Read the daily email.** After the close, you get a summary of what
   changed. The Live tab shows the account's value, its drawdown, what it
   holds, and every trade.
5. **Move to Alpaca if you want to.** Connect your own
   [Alpaca](https://docs.alpaca.markets/docs/trading-api) account, paper or
   live, with your own API keys. The strategy then trades only the starting
   balance you give it.

A **drawdown** is how far an account falls from its last high point. It is the
number most people find hardest to live with, so watch it on paper first.

## Paper trading crypto perps

A perp, short for perpetual future, is a contract that tracks a price, such as
the price of bitcoin. [Hyperliquid](https://hyperliquid.gitbook.io/hyperliquid-docs)
is an exchange that lists them. It has crypto perps such as BTC and ETH. It
also has perps that track stocks, indexes, and gold, such as XYZ:TSLA and
XYZ:GOLD.

A Tactfolio strategy can hold Hyperliquid perps instead of stocks and ETFs. It
can't hold both. Such a strategy is backtest and paper or testnet only:

- **Paper.** A Hyperliquid paper account fills pretend orders at the
  exchange's middle price, less a small cost.
- **Testnet.** You can also run it on your own Hyperliquid testnet account.
  The testnet is Hyperliquid's practice exchange, with play money.
- **When it trades.** It checks the rules at the top of the hour, on the hours
  the strategy asks for, from once an hour to once a year.
- **Funding.** A perp charges or pays a small fee every hour, called funding.
  The paper account books it, so the results include it.
- **Limits.** It holds each perp at 1x, long only. It never borrows or sells
  short. Real-money trading on Hyperliquid is switched off.

## Paper trading vs a backtest

A backtest replays your rules on past prices. A paper account runs them
forward on prices that did not exist when you wrote the rules. You need both.

| | Backtest | Paper account |
| --- | --- | --- |
| Prices used | Past prices | New prices, as they come |
| How long it takes | Seconds | As long as you let it run |
| Can the rules be tuned to it by luck | Yes, easily | No, the future is unknown |
| What it shows best | How a rule did in many past markets | Whether real fills and timing match the plan |

Start with a [backtest](https://tactfolio.com/backtesting.md) to see how a rule did in many years. Then
paper trade it to see how it does from here on. If the two look very
different, find out why before you use real money.

## Where can you paper trade?

You can paper trade at many brokers and trading apps. These are the ones we checked on October 16, 2026:

| Where | What you can paper trade |
| --- | --- |
| Tactfolio | A stock and ETF strategy, run by itself each day, with a daily email. Also crypto perps on Hyperliquid (backtest and paper or testnet only). |
| Alpaca | Any orders you or your code send, with free real-time data. You can reset the account any time. |
| Composer | A symphony you "Watch", with a pretend $1,000 |
| Option Alpha | Options and stock bots, without limits, with live data |
| QuantConnect | Coded algorithms on its own paper trading service |
| ZuluTrade | Copied forex and CFD trades in a demo account |

Pick the one that matches what you plan to trade with real money. A paper test only helps if it runs the same rules you will use later. See [the best algo trading platforms](https://tactfolio.com/comparisons/best-algo-trading-platforms.md) for how these tools compare.

## What Tactfolio does and does not do

| Tactfolio does | Tactfolio does not |
| --- | --- |
| Run any of your strategies on paper, with a daily email | Offer a click-to-buy trading screen |
| Fill paper orders at real prices with your slippage setting | Paper trade options or forex |
| Paper trade Hyperliquid crypto perps, or run them on your own Hyperliquid testnet account | Trade crypto with real money, or buy and hold coins |
| Count splits and dividends in your paper account | Sell short or borrow on margin |
| Let you move the same strategy to your own Alpaca account | Work with any broker other than Alpaca |
| Check stock rules once a trading day, near the close, and perp rules at most once an hour | Trade stocks during the day, or trade at high speed |

## Try it on Tactfolio

Open the [builder](https://tactfolio.com/builder) and pick a starter pattern. Read its backtest,
change one rule, and save your copy. Then open Trade and start it on paper.
Our guide to [automated trading](https://tactfolio.com/automated-trading.md) explains what happens
after that, day by day.

## Keep learning

- [Backtesting explained](https://tactfolio.com/learn/backtesting-explained.md): what a test on past prices can and cannot tell you.
- [Stop loss](https://tactfolio.com/learn/stop-loss.md): how a stop works, and why it can fill at a worse price.
- [Leverage explained](https://tactfolio.com/learn/leverage-explained.md): why Tactfolio keeps crypto perps at 1x.
- [Position size calculator](https://tactfolio.com/trading-tools/position-size-calculator.md): a free tool to size a trade by the risk you accept.
- [SPY](https://tactfolio.com/etf/spy.md) and [all ETF pages](https://tactfolio.com/etf.md): facts and daily figures for funds you can paper trade.

## Common questions

### Is paper trading free on Tactfolio?

Yes. Everything is free while we build. Pricing comes with live trading. You
need a free account to create a paper account.

### Is paper trading the same as real trading?

No. Paper trading uses pretend money, so nothing is at risk. Real orders can
fill at worse prices or not fill at all. Paper results also can't show how you
will feel when real money falls.

### How long should I paper trade a strategy?

There is no set time. A strategy that trades once a month makes only a few
trades in a season, so let it run long enough to see several. Compare what it
did with its backtest over the same days.

### Do I need a broker account to paper trade?

No. A paper account in Trade needs only a free Tactfolio account. You need
your own Alpaca account only when you want the strategy to place real broker
orders.

### Can I paper trade crypto on Tactfolio?

Yes, through Hyperliquid perps such as BTC and ETH. They are backtest and paper
or testnet only. You can't trade crypto with real money on Tactfolio yet, and
you can't buy coins. To test a crypto strategy first, see
[crypto backtesting](https://tactfolio.com/crypto-backtesting.md).

### Can I paper trade options on Tactfolio?

No. Stock strategies hold US-listed stocks and ETFs, or cash. They can hold
leveraged and inverse ETFs, but they can't sell short or borrow.

## Sources

- [Paper Trading](https://docs.alpaca.markets/docs/paper-trading), Alpaca, accessed 2026-10-16
- [About Trading API](https://docs.alpaca.markets/docs/trading-api), Alpaca, accessed 2026-10-16