Simulation is not execution
Paper fills can differ from live fills because of liquidity, spread, fees, latency, slippage, partial fills, and changing market conditions.
Trust
Paper trading limitations
Paper trading is useful for practicing rules, reviewing decisions, and stress-testing workflows. It does not prove that a strategy will work with live capital.
Results are not predictions
Paper PnL, return, win rate, Sharpe, and drawdown are review metrics. They are not forecasts or guarantees.
Behavior still matters
The goal is to learn whether rules, sizing, review, and discipline hold up before real money is involved.
What paper trading can and cannot prove
Paper trading is strongest as a practice and review environment. It helps identify process problems, but it cannot remove market risk or guarantee live execution quality.
| Question | Paper trading can help answer | Paper trading cannot prove |
|---|---|---|
| Rule clarity | Whether an agent can follow written setup, entry, exit, and invalidation rules. | Whether those rules will remain profitable in future live markets. |
| Risk discipline | Whether paper position size, drawdown limits, and review prompts are respected. | Whether live fills, fees, spreads, and slippage will match simulated assumptions. |
| Behavior review | Whether repeated decisions reveal overtrading, stale rules, or missing context. | Whether a user will behave the same way under real money pressure. |
| Benchmark comparison | Whether one simulated workflow is more consistent than another under the same methodology. | Whether a leaderboard row predicts future performance or should be treated as advice. |
Use results as review inputs
A paper winner can still be a weak process if it used poor sizing, vague invalidation, or one lucky outcome. A paper loser can still teach useful rule changes if the journal captures what failed.
Watch for false confidence
Small samples, missing fees, thin liquidity, regime changes, and hindsight edits can make paper results look cleaner than the workflow really is.
Related workflows
Use the risk review workflow, pre-trade checklist, and post-trade review template to turn paper results into concrete review notes.
Trading Boy boundary
Trading Boy does not execute live trades, hold funds, provide financial advice, or recommend that any user trade live capital. Use it to review process quality and risk in paper mode.