Paper Trading on TradingView: The Ultimate Guide



Paper Trading is a technique as old as stock markets. People have been using various ways of practicing before committing to buying and selling commodities and stocks for centuries. A Tradingview automated trading bot can be a great solution, but you can also use the embedded functionality on the TradingView platform to exercise before trading with real money.

What is paper trading?

We all know that trading in financial markets can be extremely risky if you do not understand what you are doing. A TradingView simulator is an excellent tool that mimics an approach that has been around for hundreds of years.

When commodities were traded along the Silk Road, many traders wrote down prices and calculated the profits if they purchased them on certain days. Then, they would compare the prices with their estimations and made corrections to the amount of goods that they would purchase during the next trading season. Similar practices were used by Japanese rice traders in the 15th and 16th century.

After the formation of first stock markets, people could not use automated charting tools or use advanced services such as TradingView simulated trading. They had to rely on slightly less practical methods like using pen and paper to write down price action and placing imaginary orders. It was a good way of training before using real money to purchase commodities and stocks.

There are two main approaches to analyzing the market:

1.       Fundamental analysis. It is a school of thinking about any financial asset as a sum of its various metrics and characteristics such as real assets, brand value, reachable audience, and more to identify whether a stock is overvalued or undervalued. In the first case, you want to use sell options or avoid a stock. In the second case, you want to buy it immediately to capitalize on the potential growth in the nearest future as the market equalizes the real value of the stock and its perceived price.

2.       Technical analysis is a completely different approach based on the idea that every single bit of useful information about a stock or a commodity is already embedded in the price. Traders already know everything there is to know about any financial instrument and the market moves according to the information available to them. Technical analysis uses various indicators and pattern seeking to predict future price action changes.

Since both methods require a lot of time to master, it is a good idea to use Trading View paper trading feature or something similar to test your approaches before you can apply them to the real market. It is doubly important for margin trading as leveraged positions can be very dangerous when used irresponsibly. You need to learn how to correctly predict prices when working with derivatives. Many retail traders attempt to trade options on TradingView using virtual money before actually buying options and futures.

Why Choose Paper Trading on TradingView?

To understand why paper trading in TradingView is an extremely useful tool for any retail trader, you need to know more about how to trade options on TradingView or use virtual money to test your technical analysis ideas. Without trying out practice tools, you won’t fully appreciate their value and effectiveness.

Before we discuss how to place a trade on TradingView, we need to talk about the advantages of this particular platform and its virtual trading simulation features.

  • Access various sources of information. If you already have an exchange that you are interested in, it is a good idea to practice using data received directly from it. One of TradingView paper trading options is a very useful feature that allows you to pick certain sources to display relevant information in the price chart. Simply go to Symbol Search and click on “All Sources” to open a list of all available exchanges that carry the assets you want to trade.
  • Use one of the best analytical platforms out there. It is impossible to describe all useful analytical features of the TradingView website as it offers a wide selection of preset strategies, sophisticated trading systems, technical indicators, graphical tools, and more. You will be able to test your wildest ideas and also engage in discussions with other community members to identify the best analytical approaches used by power users of the platform.
  • You don’t need to register to test strategies. While paid plans offer more variety and flexibility, it is possible to practice basic strategies like RSI swing-trading without even creating an account. Note that all exchanges and brokerage service providers require you to sign up to use their demo accounts (like mock trading accounts on Binance).

A paper trade on TradingView can be executed quickly and will be logged in the history to allow for thorough analysis of each and every step that you took while practicing. Having a history of trades recorded in your account is an excellent way to track your performance. You can also export any type of data in an excel file and save it to evaluate later or compare it with more recent results.

How to Start Paper Trading on TradingView

One of the advantages of this analytical platform is its user interface that has been praised by industry experts for ages. You can quickly switch between different features and panels without ever feeling lost. You can use the platform as a trading terminal (the superchart is integrated with Binance, OKX, Kraken, and over 30 other CEX exchanges and brokers) or simply start paper trading.

Here’s a step-by-step guide on how to buy on TradingView:

1.       Open a superchart window and select which asset you want to view.

2.       In the lower part of the page, look for the tab “Trading Panel”.

3.       The panel allows you to choose an exchange to trade on or engage in “Paper Trading”.

4.       Click the button and log in your “TradingView paper trade” account.

5.       You will see that you have $100 000 of fake money to work with.

6.       In the top left corner of the chart, red and blue buttons will be now highlighted.

7.       Pressing the red button will create a short market position.

8.       Pressing the blue button will create a long market position.

9.       You will be using fees and commissions as well as other parameters that are used on the source of the chart.

10.   All newly created orders will be visible in the trading panel. You can right click them to open a context menu.

11.   Positions can be closed, protected by delayed orders, or reversed.

12.   When a position is liquidated, it turns into an entry in the trading history and trading journal.

That’s it. It is the full TradingView paper trading tutorial. Of course, you can use more advanced tools or deploy sophisticated strategies, but these are things that you do not need to do to start using the paper trading functionality in the superchart.

Here are some settings that you may be interested in:

  • You can hide SELL/BUY buttons by simply unchecking the option in the trading panel settings. It can be done for visibility purposes or to take a pause while practicing. The settings menu also allows you to create one-click positions, turn on notifications, hide execution information, and more.
  • It is a good idea to check the source before starting a practicing session if you want your record to be as relevant to your future trading endeavors as much as possible. Go to Symbol Search (the button in the top left corner of the chart) and click “all sources” to pick the right exchange from the list.
  • Don’t forget to export the data after you are done. All the information about paper trading history will be erased once you reload the page. Keep the tab open to continuously record your trading operations and extend a mock trading session.

Advanced Strategies with Paper Trading

There are many interesting ideas that you can test on TradingView. We want to offer you some interesting strategies to play with. While these strategies are not the only ones that should be studied by a newcomer, we believe that they provide a good sense of how to use signals from indicators when building a profitable strategy.

Relative Strength Index trading

Many swing and scalping strategies heavily rely on this particular indicator that allows retail traders to see when the market is overbought or oversold. Relative Strength Index is what we call a momentum indicator that demonstrates the amplitude with which certain changes occur in the market and provide a more refined context to the price action dynamic shown in the chart.

This indicator uses only price action changes and looks like an oscillator positioned under the chart. A good idea is to always have volumes on to see the trading volume corresponding with RSI values. The indicator bounces between values of 0 and 100. Lower values mean that the market is oversold while higher values indicate that the market is overbought.

Here’s how to use RSI:

  • When the indicator starts approaching 100 (by default, the upper signal line is set at 70), you should look for opportunities to enter a short position (use the red button to sell the market).
  • When the indicator starts approaching 0 (by default, the lower signal line is set at 30), you should be preparing to buy assets (use the blue button to buy the market).
  • If there is a sideways motion with the indicator hovering around the value of 50, you should not take any actions.

The main goal of practicing sessions with RSI is to adjust signal lines based on your performance. Optimal RSI values are different for each asset, exchange, and time frame. It means that you need to iterate with many different settings before you can actually identify the right combination for your target assets and CEX platforms.

MACD (Moving Average Convergence/Divergence)

This indicator is heavily used by all retail traders working on all time frames. Whether you are interested in looking for short-term trends or want to find reversals for long-term market positions, MACD will be a suitable tool. Since it uses a slightly more complex structure than RSI, it makes sense to practice it just as much or more than RSI.

MACD uses three exponential moving averages:

  • The first EMA uses closing prices of 12 consecutive periods (the short-term EMA).
  • The second EMA uses closing prices for 26 periods (the long-term EMA).
  • The third one is the difference between the two plotted over 9 periods.

Different approaches to using MACD may change sources of data (opening or average prices are used quite frequently) or adjust periods for each exponential moving average. Again, it depends on the asset type, exchange, time frame, selected sources of data, and more. To identify the best combination of settings, retail traders have to iterate multiple times and evaluate their results over time.

MACD is a good trend indicator that allows its users to search for potential reversals. However, many believe that using it with oscillators such as RSI or Stochastic is a better method since it provides slightly more context to each decision.

Stochastic Oscillator

This particular indicator is primarily used by people who are interested in predicting price changes and looking for future support and resistance levels. It is often paired with graphical tools like Fibonacci lines to forecast potential support levels for an asset in the nearest future. The indicator was developed in the 1950s. Ever since, it has been a staple in the arsenal of a retail trader working with rapidly changing financial instruments.

You may change the period for which Stochastic will show the results of calculations which involve finding the values for a simple moving average (%K) by calculating the ratio between the difference of the closing prices and lowest prices and the difference between the highest and lowest prices.

The indicator is an oscillator with two visible lines: (1) %K that represents anticipatory changes in the price action and (2) %D which is a simple moving average of %K over a 3-period frame. These lines move between the values of 0 and 100. When they cross while approaching lower or upper limits, it means that the price may reverse its course soon.

Stochastic is often considered one of the most reliable technical indicators that can be used to confirm signals produced by other tools. Training with it is a good way of adapting to various market situations and avoiding false positive signals from other indicators.

Testing advanced strategies

You may also check the TradingView forum to look for sophisticated trading systems employed by power users. These are often experimental systems that users should use on their own volition. Authors never guarantee any type of performance from their ideas and allow the community to test them and confirm their theories.

These systems can be very useful and potentially better than anything else in the market due to their novelty and unorthodox approaches to analyzing the market. However, you will need to test them before actually applying them to your trading strategy.

One of the best ways to do so is to use crypto paper trading on TradingView and iterating many times while also using the “Strategy Tester” functionality to check if a strategy works against the market history. Another good method is employing tools like back-testing at WunderTrading to run a strategy many times through the available data about price action history with a little bit more precision.

If you are interested in testing multiple indicators at the same time, it is a good idea to upgrade your TradingView plan and deploy more than three indicators at once or combine them in a single tool by tinkering with the code in the Pine Editor. These features are usually used by advanced users, buy you can spend as much time and effort on trying different combinations of indicators in the paper trading account without risking any real money.

The importance of using paper trading

The famous Dunning-Kruger effect says that the less we know about any topic, the more competent we believe we are. Many newcomers believe that after reading a couple of educational articles and watching how professionals make their trades, they become knowledgeable enough to trade on their own. Nothing can be further from the truth.

There are many factors that affect your performance. While the extent to which emotions and stress will modify your end results is impossible to predict, you can certainly adjust other parameters by using TradingView options paper trading. It is a great instrument for any retail trader to use systematically.


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