STOPS by NumaSoft - Paper Trading

Paper trading is a proven method to simulate trading without risking real money. By paper trading, the novice trader can acquire a feel for the markets, gaining the discipline and confidence necessary to be successful. Seasoned traders can test new trading strategies against current market conditions.

Paper trading is not traditional back-testing with historical data, but real time trading using actual market data, entry and exit points, stop losses, profit targets, reward / risk ratios and account capital. The suspense and surprise associated with trading are always present in paper trading.

Very few, if any online brokers offer paper trading simulation for stocks. The manual record keeping and logistics associated with paper trading have always been a huge deterrent for individual traders.

STOPS has revolutionized paper trading of stocks and futures. Incorporating Trade Tracking with integrated account portfolio, Position Sizing, Risk Control, Exit Analysis, System Analysis, Monte Carlo Analysis and Tax Reporting. STOPS contains all the necessary tools to duplicate the actual trading experience, without risking your money.

STOPS Paper Trading features:

Both stocks and futures.
Both long and short positions.
Scaling out of positions.
Risk targets can be overridden on any position.
Broker Commissions.
Both intraday and end-of-day pricing.
Fully automatic with manual override.
Fully integrated with all STOPS money management tools.

The following example illustrates STOPS paper trading, starting with opening a long position and ending with closing the position:

To begin paper trading, a simulated broker account is opened. The account cash balance and per trade or per share / contract commissions are entered into the account portfolio.

The Broker Information screen records broker cash and commissions.

In this example, $10,000.00 initial account cash, $10.00 market order and $15.00 limit order per trade commissions are entered into the account portfolio.

The security pricing data source is selected. STOPS supports free intraday pricing from the Internet, MetaStock© intraday and end-of-day pricing from MetaStock©, TC2000© and ASCII files.

The Data Format Selection screen.

In this example, ASCII pricing is selected.

Risk targets are entered for use in calculating position size and initial stop-loss.

Risk Targets include maximum risk per trade and minimum reward / risk ratio per trade. (View Full-Size)

In this example, 2.0% maximum risk per trade is used to calculate quantity of shares. Minimum reward / risk ratio of 1.50 is used to calculate initial stop-loss order.

STOPS paper trading closely replicates actual trading through innovative broker / market parameter with fixed or random slippage and fixed or random short uptick percentage settings. Slippage is the difference between the order price and the actual fill price. The uptick parameter assures compliance with the Securities and Exchange Commission rule that short sales can only be filled by transactions executed at a price higher then the preceding transaction.

Broker / Market Parameters for slippage percentage and short sale uptick percentage. (View Full-Size)

In this example, slippage is specified as random from zero to 3.0% maximum with 10% of the simulated short sales occurring on upticks.

Orders are entered into the STOPS daily trade log. Orders for new positions consist of the buy price for long transactions, sell price for short transactions and quantity of shares. The default broker commission can be overridden for each order. Shares and initial stops-loss are automatically calculated and entered into the daily trade log based on risk and reward / risk ratio targets. Both may be overridden at your discretion.

The Daily Trade Log tracks all order activity. (View Full-Size)

In this example, a buy order for $16.95 is entered. The reward / risk ratio, risk targets and broker commissions are used to automatically calculate and enter the $16.68 stop-loss sell order, quantity of 250 shares, $10.00 buy order commission and $10.00 sell order commission.

Upon initiating security pricing extract, the paper trading screen displays the simulated actual buy order, slippage percentage and security pricing. The buy order may be accepted or cancelled.

The Paper Trading screen displays the simulated order. (View Full-size)

In this example, the simulated actual buy order, 250 shares of security PHHM at $17.27 per share is calculated using 1.9% slippage and security pricing ranging from $16.91 to $18.16.

Upon acceptance, the simulated actual buy order is automatically added to the daily trade log.

The Daily Trade Log tracks all order activity. (View Full-size)

In this example, the simulated actual buy order, $17.27 and $10.00 buy order commission is automatically added to the daily trade log.

Stop-loss sell order updates are entered into the daily trade log.

The Daily Trade Log tracks all order activity. (View Full-size)

In this example, the original $16.68 stop-loss sell order is increased to $16.71 on the second day and to $16.73 on the third day to minimize potential losses as the security price increases. On the fourth day, a sell-at-market order is entered.

Upon initiating security pricing extract, the paper trading screen displays the simulated actual sell order, slippage percentage and security pricing. The sell order may be accepted or cancelled.

The Paper Trading screen displays the simulated order. (View Full-size)

In this example, the simulated actual sell order, 250 shares of security PHHM at $18.65 per share is calculated using 0.5% slippage and security pricing ranging from $17.45 to $18.74.

Upon acceptance, the simulated actual sell order is automatically added to the daily trade log and the position is closed.

The Daily Trade Log tracks all order activity. (View Full-size)

In this example, the simulated actual sell order, $18.65 and $10.00 sell order commission is automatically added to the daily trade log and the position is closed.