Paper-Testing Before Live
Why paper testing matters
A backtest tells you how rules performed on past data. A paper test tells you whether YOU can follow the rules in real-time — which is often the harder skill. Most people discover their emotional discipline is weaker than they expected when they miss a signal, chase a late entry, or skip a setup that looks 'too risky'.
The 30-trade minimum
Run at minimum 30 paper trades before evaluating the method. Fewer than 30 means luck — not skill or edge — is likely driving the result. Track every signal the rules generate, not just the ones you like.
Record everything honestly
Log: date, instrument, score, entry type, entry price, stop price, target, exit price, result, and your emotional state. The emotional state column is the most revealing. If you skipped a setup, write down why. If you moved the stop, write it down.
Graduate to live slowly
After 30 paper trades showing consistent rule-following (not necessarily profit), begin live with 25% of normal size at most. The goal is to feel the emotional difference of real money without blowing up in the adjustment period.
Practice checklist
- Minimum 30 paper trades before evaluating the method
- Record every signal — including ones you skip (and why)
- Log emotional state alongside trade data
- Start live at 25% of normal position size
Mistakes to avoid
- Recording only winning paper trades — this makes the test completely useless
- Jumping to full size live after just one good paper week
- Not logging why you skipped signals — those skips reveal emotional patterns