Chapter 30 · Paper Trading
Why can't you put in real money immediately after a backtest passes?
- Skills to practice
- Data validationActual execution
- 3D simulation
- None
Market scene
Lin plans to buy 10 units at 100. When the simulated order arrives late, price has changed and only part fills. His journal still books the original price and full quantity. Zhe says plans, orders, fills, and positions are four different records; none can substitute for another.
Your decision
What evidence confirms a position after sending the order?
Observe the result
The default target is 10 units at reference 100. A full fill delayed to the third quote, 103, creates deviation of 30. A half fill creates deviation of 15 and leaves 5 units unfilled. The remainder did not earn a favorable spread: the intended exposure was never executed.
The mechanism
Paper trading tests the operating chain: continuously receiving data, generating signals, sending orders, handling reports, and reconciling. Shadow trading records what would execute without necessarily submitting orders. Neither automatically proves real queue position, impact, borrowing, or funding constraints.
This page replays one order offline. Fixed quotes, delay, fill fraction, and slippage explicitly determine results. It connects to no live feed or broker and is not a full paper account. Bad data returns a blocked state; zero fills have no price, rather than treating null as execution. Before deployment, cancellation retries, duplicate reports, position reconciliation, and recovery still need testing.
What it is called
Real markets
Chapter 13 separates reference prices from average fills.
Chapter 28 requires separate cost and deviation accounting.
Chapter 35 retains the advance plan before execution and outcomes, preventing hindsight rewriting.
Hands-on
- Change delay, fill fraction, and slippage separately; record status and remaining quantity.
- Toggle stale data on and off; verify blocked states do not invent fills.
- Complete and copy/download an execution log: plan, actual result, difference, cause, response, retest. Label it offline replay.
Synthetic replay: plan to buy 10 units at $100, followed by quotes of 101 and 103. Replays one order only, with no live market or exchange connection. Unfilled quantity is not treated as a position.
Fully filled; filled10 units, remaining0 units; execution price100; extra cost on filled quantity0 USD.
Edits exist only on this page and clear on refresh. Copy or download promptly.
Course versionV1-docs; sourcep3:report:paper-execution-journal.md；Chapter 30 / TRD-BT-006
Records parameters and results at the click only; does not mean the experiment passed.View snapshot to save
Change one variable
Three depths
- FoundationWhy can you not invest real money immediately after a passing backtest?Chapter 30
- AdvancedWhat must Paper, Shadow, and Live Small each validate?Advanced F · Institutional trading
- InstitutionalHow much live/backtest deviation should stop promotion?Institutional
Track submitted orders until filled, canceled, or explicitly rejected.
Align backtest and simulated execution trade by trade, locating differences at data, signal, order, and report layers.
Continue the project: compare Paper, Shadow, and small-scale evidence.
Validate idempotency, disconnect recovery, capital/position reconciliation, and human takeover. Promotion requires execution and risk evidence; see Advanced E.
Continue the project: define when deviations stop promotion and require rollback.
Questions to take away
Chapter self-test
No. They never formed actual positions.
No. It is a fixed-quote, offline, single-order replay.
New orders are blocked, quantity is zero, and execution price is null.
No. Data, costs, stability, risk, and actual execution differences remain gates.
One idea to take away
Paper trading further tests data timing, order acknowledgments, execution discipline, and recovery. Simulated fills cannot guarantee actual liquidity or live performance.
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Why can you not invest real money immediately after a passing backtest?
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Shadow trading：Not read
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