A backtest tells you a strategy would have worked on history. It doesn’t tell you the strategy works now, on live data, against a real broker. That’s what paper and live are for. Here’s how to use them.
Why paper comes first
Paper trading runs your strategy on a live, real-time market feed, but routes its orders to a simulator instead of a real broker. No capital is at risk. It exists to test everything a backtest can’t:
- Does the strategy place the orders you expect, when you expect, over a real session?
- Does it handle slow opens, data gaps, and quiet periods gracefully?
- Does anything time out, throw, or silently do nothing?
Most strategy bugs surface here, because paper runs in real time on real data. Skipping it means discovering those bugs with money on the line.
What to check while paper trading
- Orders. Are they the ones you intended? Any rejected?
- Fills. At what prices, and how far from your backtest’s assumptions?
- Positions and ledger. Did exposure and cash move correctly?
- Logs and issues. Did anything warn or error that you didn’t expect?
Run it long enough to see a few different market conditions, not just one calm afternoon.
Going live, deliberately
Live runs the same code against a real broker. The strategy doesn’t change; the broker binding does. Two things to internalize:
- Your broker is the source of truth. Fills, positions, and buying power come from the broker, not your software. Treat your internal state as a hypothesis about the broker’s state.
- Start from a known account state. A strategy that assumes it begins flat will misbehave if the account already holds a position. Begin flat, or make the strategy aware of what it’s starting with.
Going live should be a decision, not a toggle you flip casually. It’s the last step, taken once a strategy has earned it in paper.
Monitoring a live run
Watch the run while it executes: state, positions, orders, fills, and logs. Keep an eye on rejections, which often signal a buying-power or state mismatch. And know how to stop it, a kill control you can reach quickly is not optional.
How Periscøpe does it
On Periscøpe, paper and live are run modes, not separate programs. The same strategy version you backtested runs on a live feed in paper (simulated fills) and through your broker in live, with the buying-power checks enforcing in paper and the broker authoritative in live. Every run gives you orders, fills, positions, ledger, issues, and logs, plus a Kill control to stop it on request. Live access is rolled out to select users on request, so the step to real capital stays deliberate.