Getting Started with Paper Trading
Paper trading lets you test your strategies with live market data in real-time without risking actual capital. It's the crucial step between backtesting and live trading, helping you validate strategy performance and gain confidence before deploying with real money.
What is Paper Trading?
Paper trading simulates real trading using live market prices from exchanges (Binance) but with virtual money. Your strategies execute trades in real-time, allowing you to see actual performance without financial risk.
Why Paper Trade?
Real Market Conditions
Backtests use historical data. Paper trading uses live prices, order flow, and market volatility. It reveals how your strategy performs in current market conditions.
Catch Implementation Issues
Discover problems not visible in backtests: data delays, feature calculation errors, unexpected edge cases, or logic bugs that only surface in real-time execution.
Build Confidence
Watch your strategy run for weeks or months before committing real capital. Successful paper trading builds the psychological confidence needed for live trading.
Risk-Free Learning
Make mistakes, learn from them, and refine your approach without losing money. Paper trading is the safest way to learn trading mechanics.
Step 1: Create Paper Trading Account
Before deploying strategies, you need a paper trading account to hold virtual funds:
Creating Your Account
- Click "Paper Trading" in the left sidebar
- Click the "Create New Account" button (top right)
- Fill out the account form:
- Name: Descriptive name (e.g., "Main Trading Account", "Aggressive Strategies")
- Initial Balance: Starting capital in USD (default: $10,000, range: $1,000-$1,000,000)
- Currency: Base currency (currently USD only)
- Leverage: Account leverage multiplier (default: 1x, range: 1x-100x) - keep at 1x for spot trading
- Exchange: Exchange to simulate (default: Binance)
- Description: Optional notes about this account's purpose
- Click "Create Account"
- Your account appears in the accounts list immediately
Pro Tip: Create multiple accounts to test different strategies independently. For example: "Conservative Account" ($50k, low-risk strategies) and "Experimental Account" ($5k, testing new strategies).
Step 2: Deploy a Strategy
Once you have an account, deploy a strategy that performed well in backtesting:
Deployment Process
- From the Paper Trading page, click on your account
- Click "Add Strategy" or "Deploy Strategy" button
- Select a strategy from your saved strategies list
- Configure deployment settings:
- Deployment Name: Custom name for this deployment (e.g., "RSI Strategy - BTC")
- Capital Allocation: Amount of account balance allocated to this strategy (e.g., $5,000)
- Symbol: Trading pair (e.g., BTCUSDT)
- Timeframe: Candle interval (e.g., 1h)
- Click "Deploy"
- Strategy is added to the account in "Stopped" state
Important: You can deploy multiple strategies to one account. Each strategy gets its own capital allocation. Total allocations cannot exceed your account balance.
Step 3: Start the Strategy
Deployed strategies don't execute automatically - you must start them:
Starting a Strategy
- Find your deployed strategy in the account's strategy list
- Click the "Start" button on the strategy card
- Status changes from "Stopped" to "Running"
- The strategy immediately begins monitoring live market data
- When conditions are met, it will execute trades automatically
What happens behind the scenes: MangoLabs spawns a dedicated worker process that subscribes to live market data from Binance WebSocket, calculates features in real-time, evaluates your strategy logic every candle close, and executes trades when signals fire.
Step 4: Monitor Performance
Once running, monitor your strategy's performance:
Account Dashboard
View overall account balance, total P&L, active positions, and equity curve showing portfolio value over time.
Strategy Performance
Each strategy shows individual P&L, trade history, current position, and real-time status updates.
Trade Notifications
Get real-time notifications when strategies execute buy or sell orders. See exact prices, sizes, and timestamps.
Equity Curve
Live-updated chart showing your account value over time. Compare real-time performance to backtest expectations.
Stopping a Strategy
You can stop strategies at any time:
- Click the "Stop" button on the strategy card
- The strategy stops monitoring market data
- Status changes to "Stopped"
- Open positions are NOT closed automatically - they remain open
- To close positions, you must manually execute a closing trade or restart the strategy to let it exit naturally
Warning: Stopping a strategy with open positions means those positions will remain until you take action. The position won't be managed anymore.
Paper Trading Best Practices
Start with Small Capital
Begin with $5,000-$10,000 even if you plan to trade with more. This helps you focus on percentage returns rather than absolute dollar amounts.
Run for Sufficient Time
Paper trade for at least 2-4 weeks (ideally 2-3 months) before considering live trading. This captures different market conditions and validates strategy robustness.
Compare to Backtest
Paper trading performance should roughly match backtest results. Large deviations indicate issues with strategy logic, feature calculation, or market regime changes.
Monitor Daily
Check your paper trading accounts daily. Look for unexpected behavior, ensure strategies are still running, and analyze any unusual trades.
Don't Over-optimize
If paper trading performance is poor, resist the urge to constantly tweak parameters. Analyze what's wrong, make thoughtful changes, and re-test properly.
Common Issues & Solutions
Strategy Shows "Error" Status
Possible causes: Invalid strategy structure, feature calculation failed, database connection lost, or worker crashed.
Solution: Check strategy validation, verify all features exist and are calculated correctly, restart the strategy. If error persists, re-backtest the strategy to ensure it's valid.
No Trades Executing
Possible causes: Strategy conditions not met, market conditions different from backtest period, or logic errors.
Solution: This is often normal - strategies wait for favorable conditions. Review recent market data to see if entry conditions would have been met. Wait at least a few days before concluding the strategy isn't working.
Performance Much Worse Than Backtest
Possible causes: Over-fitted backtest (curve fitting), changed market regime, feature calculation differences, or look-ahead bias.
Solution: Stop the strategy. Analyze trade-by-trade differences between paper trading and backtest. Re-evaluate strategy logic and test on more diverse historical periods. Consider that the strategy may not be robust.