Introduction To Paper Trading | Backtesting Trading Strategies

Backtesting Trading Strategies: https://quantra.quantinsti.com/course/backtesting-trading-strategies Welcome to this video on introduction to paper trading. After completing this video, you will understand the difference between backtesting and live trading and the need for paper trading. And what is paper trading? John has backtested his strategy and is satisfied with his results. He tells Mary that he wants to start trading in the live markets. But Mary says wait! Are you sure you want to directly trade live? John says that it will be the same as backtesting, so he is prepared. But Mary cautions John that in backtesting you don't have any limitations. If the backtest shows 30% drawdown but 400% returns, you will accept it. But in live trading, you have actual money on the line. And you might cut your losses if the strategy performance is down by 10%. Thus, going from theory to practice can be difficult. John asks Mary what he should do? Mary says that there is a small step which few traders use, and that is paper trading. But what is paper trading? In simple terms, you take a notepad and write down the list of stocks you would be interested in buying or selling. Depending on the current price, you will log the buy price when the strategy gives the buy signal. And sell these stocks when your strategy gives the sell signal. For example, the strategy gave a buy signal for Tesla on 17 May at the close. Thus, you will note down the buy price as $674. Then the strategy gave the s