The post Best Paper Trading Options Platforms by Alison Plaut appeared first on Benzinga. Visit Benzinga to get more great content like this.
At one time, and because of the risk management challenges involved, listed options trading was mostly done by professionals and market makers with limited public participation. Today, you can open an online options trading account using a brokerage like Interactive Brokers and learn options trading via Internet courses.
Although the risks remain the same, you can refine your knowledge of options trading using an online paper trading options simulator that lets you practice without committing any funds, much like you might use a Forex broker’s demo account. Keep reading to find out which platform that allows you to paper trade online would suit you best.
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8 Best Online Paper Trading Platforms for Options
Several online brokerages offer paper trading platforms. Each broker has different requirements and offerings, so you should choose the broker that best fits your situation and needs carefully. Below are listed Benzinga’s picks for the best platforms for paper trading.
1. Best Overall: Plus500
get started
securely through Plus500’s
website
82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Plus500 is an online CFD broker focusing on contracts for difference (CFDs). CFDs are similar to binary options in the U.S. where traders take all-or-nothing speculation on the prices of certain securities like indices, commodities or currencies. While not legal to trade in the U.S., CFDs are legal in many jurisdictions across the globe and Plus500 offers a wide array of tradable markets using these instruments.
Plus500 doesn’t charge commission and only profits off the spread, which is the difference between the buy and sell price of a specific security. But Plus500 is not a broker for beginners — the education materials are sparse and CFDs are risky derivatives capable of sapping out all of an investor’s capital. Only trade these instruments if you understand how they operate and the risks involved with buying them.
Best For
- Traders looking for a smooth mobile experience
- Great mobile app
- Low spreads and commissions
- Unlimited demo account
- Only derivatives are available
- Not open to U.S. residents
Plus500 is a global multi-asset fintech group that operates trading platforms globally, offering a range of trading products, including CFDs, share dealing and futures trading (US).
Highlights of the platform include:
- Quick onboarding
- Simplified mobile trading
- Easy-to-use platform
- CFDs for indices, ETFs, shares, forex, commodities, options and cryptocurrency
- Free deposits and withdrawals
- $100 minimum investment
- 0.7% currency conversion fee per transaction, when the currency in your account is different from those traded
However, Plus500 is not a platform for novices as it solely makes money from spreads and does not charge a commission. You may start trading Plus500 right away, leverage your experience, expand your portfolio and start making money right away.
Why We Picked It: Benzinga enjoys how Plus500 helps investors build multi-asset portfolios that can be tasked to save for the future, produce income now or something in between, including its intuitive interface and rich cache of information.
2. Best for Active and Global Traders: Interactive Brokers
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securely through Interactive Brokers’s
website
Interactive Brokers is a comprehensive trading platform that gives you access to a massive range of securities at affordable prices. You can buy assets from all around the world from the comfort of your home or office with access to over 150 global markets. Options, futures, forex and fund trading are also available, and most traders won’t pay a commission on any purchase or sale.
IBKR is geared primarily toward experienced traders and investors but now with the availability of free trades with IBKR Lite, casual traders can also acclimate to IBKR’s offerings.
Best For
- Access to international markets
- Active traders
- Sophisticated investors
- Detailed mobile app that makes trading simple
- Wide range of available account types and tradeable assets
- IB SmartRouting provides significant price improvement vs. industry
- Fractional trading allows investing regardless of share price
- Industry’s lowest margin rates
- Earn more by lending your fuly-paid shares
- Beginner investors might prefer a broker that offers a bit more hand-holding and educational resources
Interactive Brokers’ Trader Workstation (TWS) is one of the most advanced online paper trading platforms you can find. The platform offers hundreds of tools for technical analysis capable of analyzing a wide range of markets and tradable assets. Interactive’s TWS Paper Trader virtual trading platform offers almost all of the features of the TWS platform and lets you begin online paper trading with $1 million in virtual money.
Why We Picked It: IBKR offers paper trading on a large scale that can help you see the long-term impact of your investment choices. The Paper Trader has all the tools you should expect to see on the platform, meaning you can truly practice.
3. Best for Traders of All Levels: moomoo
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securely through Moomoo’s
website
Investing is a long-term journey, and moomoo can help guide investors of all levels every step of the way. Utilized by over 21 million users worldwide – including in the US, Singapore, Australia, Japan, Malaysia and Canada – moomoo is an investment and trading platform that empowers investors with pro-grade, easy-to-use tools, data and insights.
moomoo provides advanced charting tools, technical analytics and Level 2 data for funded accounts, so investors have the resources to make more informed investment decisions. Users can access educational materials and interactive events, as well as share and learn through the inline community.
With a low-cost, competitive fee structure, moomoo can work for all investors.
Best For
- Novices
- Intermediate and advanced traders
- Active traders
- Equity and index options trading
- Commission free trading for US options, stocks and ETFs and 6.8% margin rate
- Wealth of free options tools and features, including customizable options chain, options calculator, unusual options activity, implied volatility analysis, 13 options strategies and 0 days to expiration (0DTE) options by volume
- Free Level 2 data for funded accounts
- Advanced charting tools with 100+ indicators, 37+ drawing tools and 20 candle patterns
- No minimum deposit to open an account
- 24/7 online chat support
- 5.1% APY in Cash Sweep program for new and qualified users
- Does not support crypto
- Does not support retirement accounts or mutual funds
Moomoo is an intuitive investment and trading platform with easy-to-use and professional tools, data and insights that equal a pro-level trading experience for all traders, no matter their level of expertise, especially because you can paper trade as you practice for live trading in the future.
When you open a brokerage account with Moomoo Financial Inc, features will include:
- Real-time Level 2 stock and options market data for funded accounts
- Advanced technical indicators
- Unique charting tools
- Advanced options orders
- Full extended trading hours from 4 AM to 8 PM EST
- Multi-market quoting
- Low fees, $0 commission on U.S. Stocks and ETFs, along with $0 equity options contract fees
- 4.1% APY in the Cash sweep program and a 4% boost for qualified customers
Users can reach out to the moomoo customer support team by phone during trading hours or via email. FAQs in the Help Center can also answer specific questions.
The site and app also helps users learn with a nice educational offering and a community with more than 20 million users worldwide.
Why We Picked It: Moomoo stands out as a paper trading platform due to its user-friendly interface, advanced charting tools and real-time market data, allowing users to practice trading strategies without financial risk.
4. Best for Copy Trading: eToro
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securely through eToro’s
website
Cryptocurrency is offered by eToro USA LLC (“the MSB”) (NMLS: 1769299) and is not FDIC or SIPC insured. Investing involves risk.
eToro is a leading trading and investing platform that’s recognized for its stock and crypto broker services. Its standout feature, copy-trading, allows users to reproduce the trades of other investors on the platform. In addition to stocks and cryptocurrencies, eToro provides Smart Portfolios — diversified portfolios of crypto assets managed by eToro.
The platform is regulated by regulatory authorities such as the FCA, SEC, ASIC and CySEC, ensuring a level of trust and security for users. While eToro boasts a user-friendly web and mobile platform, it has limited customizability and lean educational and research offerings. Overall, eToro provides a convenient and regulated platform for social trading and investment.
Best For
- Investors who want to follow and copy other traders
- Investors who want to trade crypto, stocks and options on the same platform
- Beginners who want to invest in stocks and ETFs with zero commissions and copy-trading features
- Commission-free stocks and ETFs trading
- Innovative social investing platform with CopyTrader feature
- Access to a wide range of cryptocurrencies, stocks and ETFs
- Free virtual trading account and digital wallet
- High spreads for buying and selling crypto assets
- Contracts for difference (CFDs) unavailable inside the U.S.
eToro is one of the largest and most prominent online brokers in the world. However, eToro does more by allowing you to copy the trades of the best investors, using social trading to your advantage.
The CopyTrader feature allows you to copy the buy and sell orders of known crypto professionals, allowing you to learn how to trade and benefit from their expertise. Prices with eToro are competitive, and the platform offers several educational options that help you learn how the markets work.
You can use the CopyTrader feature along with other self-directed options that help you add more diversity to your portfolio. Remember, with the CopyTrader, there are no management fees, making it even cheaper to add to your portfolio.
Why We Picked It: eToro focuses heavily on the modern, new trader, helping you learn more about investing. Several available assets on the platform make online paper trading more effective. You can also use eToro on your browser and transition to the mobile app
5. Best for Options Trading: Tradier
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securely through Tradier’s
website
Tradier Brokerage distinguishes itself through its highly customizable platform and focus on active traders, particularly those engaged in options trading. Investors take advantage of its low costs, advanced tools and human tech support.
While many advanced investors use it for trading options, futures and more, you can gradually build up confidence with the tools if you’re just starting. Most notably, you get your choice of trading platforms developed by third parties, including AI-based tools, automation, signals, bots, order flow and chart analysis tools. These platforms include the popular TradingView, as well as Track ‘n Trade, TradierPro, TrendSpider, iVest, Social.Trade, Option Samurai, WealthCharts, Option Alpha, PeakBot and many more.
Tradier allows you to access the platform’s many features with the Standard free plan, or you can opt for the Pro plan that costs $10 a month. Feeling overwhelmed with options trading or unsure how futures work? Tradier’s resources and community can help you gradually build trading knowledge and try out the platform with smaller trades.
Tradier also facilitates access to commodities like gold, oil and agricultural products such as corn for those looking to venture beyond traditional markets. These alternative assets can add a layer of diversification by providing exposure to different economic factors and reducing the overall volatility of your portfolio. Trading popular indexes allows you to invest in broader market trends, offering another avenue for spreading risk across multiple asset classes.
Best For
- Experienced traders
- New investors who want strong diversification and educational resources
- Get started for $0 a month
- Choose your favorite trading platform
- Mobile app with a 4.9 average rating
- Inexpensive option fees and low-margin rates
- Unlimited commission-free options and stock trading
- High fees for IRAs and document processing
- No-transaction-fee (NTF) mutual funds aren’t free to buy
- Not the simplest platform for beginners
Tradier uses application programming interface (API) technology to give you access to several different options trading software and platform choices, including an online paper trading choice.
With Tradier, you’re not locked into only one platform, so you can integrate other platforms into your Tradier workstation while taking advantage of Tradier’s low commissions and fees.
Why We Picked It: The API integration technology on Tradier is powerful in that it helps you connect to the places where you prefer to invest. Additionally, commissions and fees are low, meaning that you can start saving money once you’ve practiced as a paper trader.
6. Best for Professional Traders: TradeStation
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securely through TradeStation’s
website
TradeStation is for advanced traders who need a comprehensive platform. The brokerage offers an impressive range of investable assets as frequent and professional traders appreciate its wide range of analysis tools. TradeStation’s app is also equally effective, offering full platform capabilities.
Best For
- Advanced traders
- Options and futures traders
- Active stock traders
- Comprehensive trading platform and professional-grade tools
- Wide range of tradable securities
- Fully-operational mobile app
- Confusing pricing structure to leave new traders with a weak understanding of what they pay
- Cluttered layout to make navigating TradeStation’s platform more difficult than it should be
Once the platform of choice for many professional traders, TradeStation’s GO account offers new traders access to most of the same stock screeners and features of their professional platform, also available on their online paper trading platform.
The broker also offers extensive educational and developmental tools to help new traders excel in their trading. TradeStation offers a wide range of tradable assets and charges $0 commissions on stocks and most ETFs.
Why We Picked It: The large range of tradable assets on TradeStation makes it much easier to invest in a diverse portfolio. You can paper trade on this platform before deciding what type of account you prefer to maintain.
7. Best for Short Selling: TradeZero
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securely through TradeZero’s
website
TradeZero is an online broker and free stock trading platform that provides everything you need to successfully share and trade, including round-the-clock customer support. TradeZero provides four different trading state-of-the-art software programs with its services, a locator for sourcing shares for shorting, commission-free trades, and real-time streaming, to name a few of the features promoted on their website. The software is a unique and (potentially) affordable option for anyone interested in stock trading.
Best For
- Traders seeking high transparency and mobility in a stock trading program
- Those attracted to commission-free trades
- Those seeking a free version of a high-quality trading program
- 24/7 live customer support
- Uses ZeroWeb technology, a powerful level 2 online platform with direct market access
- Mobile app allows users to access stocks and trade in real-time while on the go
- Enforces Pattern Day Trading restrictions (accounts need to maintain a daily equity balance of at least $25k)
- Mobile app could offer more features
TradeZero ensures that you can trade both on your desktop and mobile devices. The online trading platform offers free trading options, and you can also take advantage of low fees for other trades.
Dedicated 24/7 customer support is available, along with a secure platform that adheres to all federal standards. You can invest using the free app, or you can move up to a Pro account for $59 per month. There are powerful charting and technical analysis options, and you can use free limit orders and no pattern trading rules to invest with the strategy you prefer.
Why We Picked It: TradeZero offers low pro account fee that helps you get the support you need without overspending on that support. You can paper trade here and get customer support at the same time, learning how best to manage your portfolio. There’s no urgent need to step up to a Pro account if you don’t want to.
8. Best for Beginners: Webull
get started
securely through Webull’s
website
Webull is a commission-free trading platform designed with both beginner and advanced investors in mind. Offering an extensive range of assets like stocks, ETFs, and futures, Webull makes it easy for users to manage their investments through a highly intuitive interface. With educational resources, paper trading options, and no minimum account balance required, Webull caters to those looking to start investing without high upfront costs. The platform’s mobile app ensures that users can trade anytime, anywhere, making it a flexible choice for those with busy lifestyles. Webull’s customer service options are limited, and the platform may feel overwhelming to those completely new to investing.
Best For
- Commission-free trading
- Mobile and desktop trading
- Beginners and experienced traders alike
- No commissions on trades
- Extensive range of tradable assets
- Easy-to-use mobile app
- Limited customer service options
- Learning curve for complete beginners
Webull was designed to make options trading easier for investors, using AI and machine learning technologies to produce better strategies. Plus, you get recommendations for trades made by professionals, allowing you to take a profitable path to focus on income generation, increasing profits or specific entries into the market.
Best for beginners, anyone can use this online paper trading platform to refine their options trades. Additionally, several educational tools on the site teach you about the options market — one that’s often misunderstood by the public.
As a part of the refining process, you can use online paper trading to study, learn and practice how you would prefer to make investments. This is an important part of any trading journey because it teaches you what a real-world situation would look like without putting up your own money.
Why We Picked It: Webull lets you use over 50 technical indicators and 12 charting tools to plan each trade. You can learn quite a bit about the options market before you invest your hard-earned money.
What is Online Paper Trading?
Paper trading dates back to well before the advent of online trading, and the activity’s name reflects how traders would practice writing trades on paper before committing money to the activity. New options traders can learn basic strategies through online paper trading, while seasoned traders sometimes paper trade to test new options positions and strategies.
In practice, paper trading traditionally consisted of writing down hypothetical buy and sell decisions on a piece of paper instead of actually placing real trade orders through a broker. This process was as simple as jotting down trades in a notepad or using a spreadsheet to enter trades and then analyze positions.
With today’s technology, traders can paper trade options using either a market simulator or real-time market prices and software that emulates a trading platform. A modern online paper trading platform typically lets options traders enter and exit the market and assess their net positions virtually in real-time. This process provides a useful practice opportunity, as well as important insights into how their trading strategy and virtual options positions would perform in an actual funded account.
Pros and Cons of Paper Trading Options
Paper trading can offer considerable benefits to new and seasoned traders. However, some key limitations to online paper trading could become evident once the trader begins to operate in a funded account. Benzinga has listed below some of the pros and cons of paper trading that you might want to become familiar with before opening a virtual options trading account:
Pros
- Lack of stress: Because you don’t have any funds committed to your trading, you usually won’t be affected by the two most common emotions involved in trading: fear and greed. Without the fear of losing money, the paper trader can concentrate on risk management and how their positions behave in the market without being influenced by the emotional element of trading.
- No risk: Since online paper trading does not require funding of any kind, you cannot lose money from poor paper trading decisions, a bad strategy or unfortunate market timing. By eliminating the financial risk factor, paper trading online allows you to analyze the flaws in your trading process and hone your strategy further. This can give you an edge that you can later benefit from when trading in a funded account.
- Practice: Practicing option trading in a virtual account gives you considerable insight into how you and your strategy will behave when operating in a live funded account. By paper trading online on an options trading platform, you’ll gain experience in all aspects of trading, including making trading decisions, entering orders, timing and establishing positions, managing risk and taking profits or losses as you close positions out.
- Confidence: Making virtual money from trading complex options positions can give novice options traders more confidence when trading in a live account. One of the key elements to successful trading is feeling secure in your trading decisions, so developing confidence in a paper trading account can benefit you when trading in a live account.
- Statistics: Trading for a month or more in a virtual account will generate realistic statistics about your chosen strategy so you can determine whether it is likely to be profitable or not. This process allows you to find and address weaknesses in the strategy and lets you to make appropriate changes to enhance your strategy’s success.
Cons
- Risk-taking differences: Paper trading online allows traders to take risks they would not otherwise consider since no monetary gain or loss is involved. Traders using a virtual account may expand their profits with little consideration of the actual risk of loss they take with a funded account. At the same time, losses can also lose their emotional sting since only virtual money is being lost.
- Lack of accuracy: Since online paper trading involves using only virtual money, dealing spreads may not be as accurate as you would experience when trading in a live account.
- Missed market correlations: When online paper trading individual stocks and options, a trader might overlook the influence of the broader stock market that can occur when volatility increases. Results obtained trading individual stock options in a real trading environment may differ due to stock market correlations.
- Unrealistically easy execution: Trading on paper lets you quickly pick your position entry and exit points, but this might not happen as smoothly when you go to execute a real trade because of slippage and requotes. Markets can also shift direction without warning as economic information is released or when large transactions are executed. Unless you use a no-slippage broker, there is no way to know what kind of slippage your orders might experience, so the results of online paper trading may be less than accurate.
Who Should Try Online Paper Trading?
People who would most benefit from online paper trading options include:
- New traders: People with no experience in the market would gain invaluable trading experience by paper trading for several months or more. The experience and knowledge gained after paper trading could prepare a novice for trading options in a live, funded account.
- Traders with little experience: Many traders and investors have little or no options trading experience. These market participants could benefit from paper trading using an options simulator to practice before starting to trade in a live brokerage account.
- Experienced options traders: Traders with experience could paper trade to test new options strategies, try out a different underlying market or see how an existing options trading plan might perform under different market conditions.
Sharpening Your Online Trading Skills
Benzinga has presented above some of the best options for trading options in a virtual account, although the best broker to choose will depend largely on your financial situation and your specific needs and preferences as an options trader. For example, if you want to trade options on multiple assets actively in several world markets, then Interactive Brokers could work better for you than other platforms. On the other hand, if you want to learn how to use one of the very best online option trading platforms available, you could gravitate toward using the thinkorswim platform from Charles Schwab to get started with online paper trading options.
For more information about the pros and cons of individual option brokers and their trading platforms, you can check out Benzinga’s best options broker review or find the best online stock trading platforms or best day trading platforms here.
Frequently Asked Questions
Is paper trading a good way to learn?
Paper trading can certainly enhance your skills as a trader, allow you to practice, help you become more familiar with a market and highlight potential trading issues, so it is a great way to learn how to trade. The more familiar you become with any market, the more likely you will be able to trade that market profitably. However, your experience trading in a virtual account may differ from trading in a live account for several reasons.
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Can you make money from paper trading?
No, you cannot make money by paper trading, although you can develop a successful track record. You can also make money by applying the knowledge you gained from paper trading in a live account.
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What platforms can you paper trade on?
Virtual paper trading is another name for online paper trading. It allows you to simulate real-world values and price movements of stocks to practice trading using virtual money.
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What is virtual paper trading?
Interactive Brokers, eToro and Charles Schwab are all great broker options for paper trading.
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Is paper trading free?
While there’s no possibility of losing money from trades, not all online paper trading is free. Some online paper trading platforms require a fee for certain trades or to access the trading platform.
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Is paper trading legit?
Online paper trading is an effective training tool. However, it does not necessarily simulate real market situations as some traders may be more susceptible to emotional decision-making when actual money is involved. Likewise, some traders may be susceptible to euphoric trading, taking exceptional risks with paper trading, especially if they have large accounts.
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The post Best Paper Trading Options Platforms by Alison Plaut appeared first on Benzinga. Visit Benzinga to get more great content like this.