This article was originally published on the FlyTradr blog.
Paper Trading vs Live Trading: Why Your Results Will Always Differ
Paper trading is the step between backtesting and live trading. You run your strategy in real market conditions, with real prices and real market hours, but without any actual money at risk. It is a genuinely useful tool, and it should be a required step in any systematic trader's validation process.
But paper trading will never perfectly replicate live trading performance. The gap between the two is real, consistent, and predictable. Understanding what causes it helps you use paper trading more effectively and go into live trading with more accurate expectations.
What Paper Trading Actually Tests
