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Paper Trading UK Guide 2021

A paper trading account is a viable way to test out you trading strategies. If you are looking to make your first step in the trading world through a paper trading account, this guide will cover everything you need to know.
Author: Tom Chen

Last Updated: March 17, 2021
Paper Trading UK Guide 2020
Paper Trading UK Guide 2020

Even if we are all familiar with the sentence “practice makes perfect”, it’s still an essential mantra to consider in every field of life, particularly when competing with other master traders. This is one of the main reasons why paper trading is so important. As such, many online brokers have enabled UK paper trading accounts to help newbies and experienced traders hone their skills and backtest their trading strategies before risking real capital.

In this detailed guide, we’ll cover everything you need to know about paper-trading in the UK. We’ll show you how to find the best paper trading platform in the UK, outline the benefits of this trading account, and help you to get started quickly.

Table of Contents

Contents [show]

    How to Start Paper Trading in 3 Steps

    Step 1: Choose a Paper Trading Broker

    etoro logo

    Decide which paper trading broker you want to use. We recommend eToro.

    Step 2: Create Your Account

    eToro Financial status information

    Create your paper trading account by providing some basic personal information.

    Trade on a Demo Account

    what is options trading?

    Get used to the platform and practice your strategies with paper trading.

    75% of retail investor accounts lose money when trading CFDs with this provider.

    What is Paper Trading?

    What is paper tradingPaper trading is a simulated trade environment in which the user can ‘practice’ trading without committing and risking real money. The term ‘paper trading’ derives from the old method of backtesting trading strategies when an investor could practice paper trading using a newspaper and a pencil and paper.

    Since paper trading is a practice technique which uses virtual money, you can get in and out of trades, learn the sizes of your instruments’ contracts, get familiar with the features and tools of the platform, find the right leverage ratio for you, improve trading skills, and backtest different trading strategies.

    Paper trading in the UK is a very popular method to practice trading for beginners that want to enter the markets, however, experienced traders and investors often use this type of trading account to backtest a certain trading strategy before they apply it in live markets.

    Benefits of Paper Trading in the UK

    Paper trading is a great tool for both novice and professional traders. As such, below we list some of the main reasons why you should use a UK paper trading account before you start trading with real money.

    No Capital Risk

    Paper trading enables traders to simulate the trading activity without risking real capital. In other words, it is an account that you can use to practice your trading, regardless of your trading knowledge and experience. This can be done due to the fact that some online brokers allow you to open a demo account without making a first deposit and start practicing your trading with virtual money.

    Shortens the Learning Curve

    A demo account is the best way to start and learn trading the markets. Since trading is not an easy task and involves many trading mistakes before you become an expert, this type of account was designed to give you the chance to learn how to place orders, navigate inside the platform, learn how to analyze trading charts, and understand the dynamics of the markets. You can also make use of a demo account to learn how to utilize various trading features and tools provided by the broker.

    Backtest Trading Strategy

    One of the main advantages of a paper trading account for novice and experienced investors alike is the ability to backtest trading strategies. Having a trading strategy is crucial to trading success and you should test it on a demonstration account before you risk your capital. You should also keep in mind that while the majority of online brokers enable access for a limited period of time of around 30 days, other trading platforms like eToro enable unlimited access. This means you can always backtest your new trading strategy on a practice account.

    Limitations of Paper Trading

    Although a UK paper trading account allows traders to simulate trading strategies with live market prices and no capital risk, there are some key limitations that you must take into consideration. Those include:

    • No Emotions in Trading – When you paper trade, you will most likely not follow the trade properly as you do not risk your real money. Thus, you will not feel connected to your trade, and a demo account simply doesn’t simulate the emotions that a trader feels when trading the real live markets.
    • No Slippage – A slippage in trading is a term that refers to the difference between the expected price of a trade and the actual price at which the trade is executed. Trades made through a paper trading account will not be subject to slippage.
    • Commissions and Spreads – On a real live trading account, you may have to deal with all sorts of hidden costs and varying spreads that are not displayed on a demo account.

    Paper Trading Strategies

    A demo trading account is used to study the functionality of a chosen trading platform, the trading conditions provided by a broker, and most crucially, testing a trading strategy. As such, we will go over some of the most popular trading strategies that you can employ on a paper trading account:

    Scalping/Day/Swing Trading

    Day trading has been employed by traders for many years and it is is still considered risky and definitely not suitable for all types of traders. But in order to increase the chances of success, many day traders will test different strategies in a paper trading account before they try them out in the real live market. If you are planning to day trade, you must find a reliable trading platform and test your trading skills and strategy before you risk your capital.

    Because day trading is not only about making profits, but it is also about avoiding big losses a paper trading account can be a great way to learn the markets. It is, therefore, crucial that you track your results and analyze your entry and exit points at the end of every trading day.

    Position Trading

    Position trading is a trading strategy where an investor holds a position for a long period of time, typically a number of weeks or months. While it is a challenge to test a position trading strategy on a paper trading account, it can help you learn how to place orders, manage existing trading positions, and get familiar with the software and the trading conditions provided by the broker (such as overnight fees, margin requirements and leverage).

    Automated Trading

    UK paper trading accounts allow you to test automated strategies, meaning you can select a certain automated trading solution and see if it works on your demo account. For example, brokers like eToro and FXCM enable you to use CopyTrading tools that let you copy the trades of other traders. If you have any concerns about choosing the right trader to follow, you can use a paper trading account to analyze the trader’s performance before you risk your capital.

    Algorithmic Trading

    Algorithmic TradingAlgorithmic trading is a trading method of executing orders using advanced mathematical models and computer programs to define a set of instructions for placing orders in the market. Backtesting an algorithm means that you must run the algorithm against historical data and study its performance before you apply the algorithm in the live market. As such, some brokers such as AvaTrade allow you to backtest algorithmic trading in a virtual trading environment.

    How to Find the Best Paper Trading Platform

    Nowadays, there are many options to choose from among the various online forex and CFD brokers that operate in the UK. However, there are some key factors that you must take into consideration before you choose a paper trading account:

    • Time limit – The majority of online brokers will provide you with a paper trading account, however, only a few will allow you to get unlimited time access to your demo account. Obviously, your preference is to paper trade with brokers that provide demo accounts that never expire like eToro, and Plus500.  
    • Tradable assets – It is advisable that you choose an online broker that gives you access to a variety of markets and products, particularly for beginner traders. This will help you find the instrument or market that suits your trading style. 
    • Fees – Paper trading accounts are often offered by brokers with the best possible spreads and trading fees. These conditions may not necessarily transfer to live accounts and as such, you have to take into consideration the fees and spreads applied by the broker.
    • Trading platform – Choosing a trading platform is a crucial decision for a trader and the choice highly depends on your needs and the trading strategy you wish to pursue. For example, eToro is the most recommended trading platform for social trading activity, while Plus500 is best for those who are looking for a cost-effective platform. Platforms like FXCM, AvaTrade, and Capital.com are more suited for experienced traders.
    • Educational tools – The goal of a paper trading account is to learn more about the process of trading, understand the markets, and how to use a trading software. Many of the best online CFD brokers offer educational resources and research trading tools. These include news articles, technical analysis notifications, guides, economic calendar, trading signals price alerts service, and calculation tools. 
    • Size of Paper Trading Account – Each demo account has a starting balance of virtual money. While some brokers offer around £5,000-£20,000 as an initial balance, others allow you to trade with generous amounts of virtual money. Regardless of the amount you have as a starting balance, it’s advisable that you make sure you maintain realistic paper trading and adapt the right size of positions to your expected amount of investment. More importantly, you’ll have to learn the size of lots on a platform and how to calculate pips. 
    • Customer service – As a beginner trader you will most likely encounter many technical problems. For that reason, you’ll have to make sure that your chosen broker supports multiple communication channels that provide an engaging trading experience.

    Best Paper Trading Accounts 2021

    In order to start paper-trading in the UK, you will first need to find a regulated brokerage firm that allows you to open a demonstration account. While there’s a wide range of brokers to choose from, we have selected the five most trusted brokers in the UK that offer paper trading accounts.

    1. eToro - World Leading Social Broker with $100,000 Paper Account

    eToro is a popular online trading platform where investors can trade thousands of markets and products on a commission-free model. This broker is also also a full-fledged social trading network that allows investors to interact with other traders and follow their trading activity, including a trading tool called CopyTrade that enables users to completely automated trading by copying the trades of expert investors.

    As expected with a brokerage firm like eToro, the broker offers a free paper trading account with a pre-set balance of $100,000 in virtual money.  eToro’s platform is one of the most user-friendly and easy to use trading platforms in the market, and is very similar to other social network sites. On this platform, you will get access to its social trading platform where you will be able to learn how to place trades, follow other members, set a user profile, and use the CopyTrade tool.

    Another advantage of eToro’s platform is the functionality of the switching network. On its platform, you can switch between a demo and a real live account in one click. It is completely free to open a paper trading account with eToro and you can use the unlimited demo account as long as you want. Once you feel ready to start trading the real-live market, eToro requires UK investors to deposit at least £150.

    Our Rating

    • eToro offers its clients an unlimited demo account
    • You can easily shift between the demo and real-live account
    • Largest social trading platform in the world
    • Heavily regulated by the FCA, CySEC and ASIC
    • Does not support a desktop trading platform
    75% of investors lose money when trading CFDs.

    2. Plus500 - Unlimited CFD Paper Trading Account

    Another top brokerage firm in the UK that offers a completely risk-free paper trading account is Plus500. The broker was founded in 2008 and is considered one of the safest brokers in the world with its wide regulatory framework. On this platform, you can practice trading shares, commodities, indices, FX currencies, ETFs, and options.

    Much like eToro, Plus500 enables users to easily switch between the two accounts and to have unlimited access to the demo account. The Plus500’s user-friendly trading platform gained mainstream popularity among investors due to its simplicity, ease of use, and the low-cost pricing structure. One of the things we like about Plus500 is that the platform offers built-in risk management tools such as guaranteed stop loss and trailing stop-loss orders as well as price alerts service.

    Plus500 also offers a quick sign up process to its own proprietary trading platform that’s highly intuitive and is available on any web browser or on a mobile phone. The available leverage for Forex trading on the Plus500 platform is 30:1, while the leverage for share CFDs is 5:1. Plus500 offers two types of accounts consisting of a demo account, which has no time limit, and a live account that requires a minimum deposit of £100.

    Our Rating

    • Plus500 demo account has no time limit
    • Tight spreads and low trading commissions
    • More than 2000 shares from various stock exchanges
    • User friendly and intuitive trading platform
    • Not suitable for professional traders
    80.5% of investors lose money when trading CFDs.

    3. AvaTrade - Best Options Paper Trading Account

    If you’re a beginner or an experienced trader looking for an options paper trading account, AvaTrade is the ideal trading platform for you. This online broker was founded in 2006 and offers a wide range of markets and products including FX options.

    AvaTrade provides its own highly advanced platform called AvaOptions, which is available on mobile devices as well as desktops. The AvaOptions is a unique and innovative platform, with high-end functionality that was specifically designed for options trading. Investors at AvaTrade will get access to more than 40 currency pairs and any combination of vanilla options in one single account.

    On top of that, AvaTrade offers a paper trading account on other financial assets such as shares, commodities, indices, cryptocurrencies, bonds, and ETFs. You will be able to start paper trading with a sum of $100,000 of virtual money. In terms of the range of trading platforms, AvaTrade allows you to trade on the AvaOptions, or the popular MetaTrader4, the MetaTrader5, and another proprietary trading platform called the AvaTradeGo.

    The downside to the AvaTrade paper trading account is that it is limited to a duration of 21 days though you can contact the support team and extend your demo account beyond this period of time.

    Our Rating

    • Allows you trade options on more than 40 FX currency pairs
    • Offers tight spreads and low fees
    • Supports a unique trading platform for options trading
    • Heavily regulated
    • The demo account is limited to 21 days
    There is no guarantee you will make money with this provider.

    4. Capital.com - New Broker with an Award Winning Trading Platform

    Capital.com is a global trading platform with operations in a large number of countries. This broker features an award-winning highly advanced in house trading platform that enables investors to get access to everything they need on one single platform including an advanced charting package, risk management tools, financial news, trading insights, and an AI powerful technology that analyses investors’ trading behavior to help them make more profitable trading decisions.

    Capital.com allows new and experienced traders to try the platform before investing real money. The registration process for a paper trading account at Capital.com is very easy and can be done quickly. The key benefit of this broker, apart from offering a unique artificial intelligence technology, is the huge selection of shares and cryptocurrencies. Overall, investors will get access to more than 3000 markets on one single platform.

    Finally, Capital.com is fully regulated in the United Kingdom by the Financial Conduct Authority (FCA). The broker offers three account types, including Standard, Plus and Premier. On any type of account, you can trade CFDs with leverage of up to 30:1.

    Our Rating

    • Provides a spread betting account for UK residents
    • Wide range of shares and cryptocurrencies
    • A powerful AI technology that help traders get trading ideas
    • Regulated by the FCA
    • MetaTrader 4 is not available
    There is no guarantee you will make money with this provider.

    5. FXCM - Best Paper Trading Account for Forex Traders

    FXCM is a UK-based broker that specializes in offering forex and CFD trading services for retail and institutional clients. The broker was founded in 1999 and has a long history in the markets. As such, it is considered safe as it is regulated by top-tier financial authorities such as the FCA in the United Kingdom and ASIC in Australia.

    FXCM is most suited for active forex traders thanks to the wide range of FX currency pairs and the competitive spreads it offers. It is also one of the best trading platforms in the markets for those who want to use automated trading strategies. On top of FX currency pairs, the platform also covers shares, indices, cryptocurrencies, commodities, and trading baskets. This trading platform is particularly popular among day traders because of its competitive pricing structure and the selection of professional trading platforms. These include the Trading Station, the MetaTrader4, ZuluTrade, and Trading View. This means you can open a paper trading account on various trading platforms.

    Their live forex, indices and commodities demo account offers £20,000 of virtual money. The other option is to open a Forex Trading MT4 Demo account that allows you to practice trading with £50,000 of virtual money

    Our Rating

    • Supports multiple trading platforms, including the MT4
    • fully supports automated trading solutions
    • Ideal for both novice and experienced traders
    • A huge range of FX currency pairs
    • A limited number of shares is available
    • The broker's website is outdated
    Paper Trading Broker Paper Trading Account Size Time Limit 
    eToro $100,000 No limit
    Plus500 £200,000 No limit
    AvaTrade $100,000 21 days
    Capital.com £1,000 No limit
    FXCM £50,000 No limit


    Paper Trading Pros & Cons


    • You do not have to risk your money
    • You get access to a trading platform including all the features and tools
    • You can build confidence as a trader
    • A great tool to backtest trading strategies
    • Takes the stress out of the trading
    • Shorten the learning curve
    • You get familiar with the platform and broker’s trading conditions


    • No slippages
    • There’s less emotion when paper trading

    How to Start Paper Trading

    If you want to start paper-trading in the UK, in this section we’ll show you how to get started using eToro, which is our pick for the best paper trading account in the UK.

    Step 1: Open a Paper Trading Account

    The first thing you need to do is to visit eToro’s homepage and sign up for a risk-free paper trading account by clicking on the ‘Try Free Demo’ button. Then you will be asked to enter your email address and password for your account creation or you can sign up with your Google, Facebook, or Apple account.

    Step 2: Get Familiar with the Platform

    You will now be transferred to the eToro trading platform where you can start practicing your trading with $100,000 virtual funds. But before you start trading, it’s important that you get familiar with the platform. For those who have experience with other platforms, it’s just a matter of seconds or minutes to get familiar with eToro’s trading platform. For beginners, it’s important to take it slowly and learn every tool the platform has to offer.

    Step 3: Place an Order

    Next, you’ll need to learn how to place an order. In our example, we want to trade the British pound versus the US dollar, so we enter this FX currency pair into the search box at the top of the platform.

    Then, an order box will pop up. Once you click on Buy or Sell, you will be able to modify the amount of the trade and insert a take profit and stop-loss orders. Finally, click on the Buy button to confirm your market order.

    Step 4: Start Live Trading

    Once you are truly confident trading on a demo account, you should consider moving to the next step of trading the live markets. The process is very simple and you can simply switch to your real-money account from your paper trading account. To get started with a live account, you will be required to meet a minimum deposit of £100.


    If you are making your first steps in the trading world, it’s very likely that you’re going to make a lot of mistakes. In fact, even experienced traders make technical mistakes when placing orders and making trading decisions. Though paper trading is crucial for anyone who wants to enter the trading world, it’s also important to understand the limitations that come with a demo account. Ultimately, paper money is not real, and as such, you won’t have the same emotions when trading with actual money.

    Nevertheless, paper trading in the UK is the most efficient way to get trading experience without putting your money at risk. A demo trading account gives new investors and traders a general idea of how the market works and how the broker’s platform functions. It is important that you choose a demo account that meets your needs, try to learn as much as possible, and be realistic with your paper trading account.

    eToro: Best UK Paper Trading Account

    Our Rating

    • £100,000 paper trading account
    • Huge range of assets
    • Social trading network
    • Copy other traders
    • FCA regulated broker
    75% of retail investor accounts lose money when trading CFDs with this provider.


    Why should you use a demo account?

    A paper (demo) trading account enables a trader to simulate a market live trading environment without risking real money. It is, therefore, the best tool to practice trading before risking real money. A paper trading account also enables you to familiarise yourself with the technical aspects of the platform as well as trading conditions offered by the broker such as the leverage ratio, lots size, spreads, and trading fees.

    What is the best paper trading app?

    There are many different paper trading accounts you can trade in the UK. As such, it's recommended that you try more than one trading platform before you risk real money. Following this review, we can advise the following: eToro is the best demo trading account for social trading, Plus500 and Capital.com are the best paper trading accounts for share trading, AvaTrade is best paper trading account for options and automated trading, and FXCM is the best demo trading account for forex trading.

    How long should I trade in demo mode (paper trading)?

    Well, there are many opinions as to how long a beginner trader should trade on a demo account. Professional traders typically trade between 3-6 months on a demo account but for those who plan to trade from home, our suggestion would be to paper trade for around 4-6 weeks.

    What are the key differences between a demo and a live trading account?

    The key difference between the two types of accounts is that on a demo account you will be able to trade with virtual money while on a real live account, you trade with your own money. But there are other differences to take into consideration: In a paper trading account, stop-loss and take profit orders are always perfectly executed. Moreover, trades made through a demo account will not be subject to slippage and the spreads often vary from those of live accounts.

    What is the best forex demo account?

    FXCM offers a demo account to retail clients and ranks as the best forex broker due to the wide range of FX currency pairs, the high leverage ratio, and the selection of trading platforms that include the Trading Station, MetaTrader4, ZuluTrade and TradingView.

    All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.

    Tom is an experienced financial analyst and a former derivatives day trader specialising in futures, commodities, forex and cryptocurrency. He has a B.A. in Economics and Management and his work has been published on a range of publications, including Yahoo Finance, FXEmpire and NASDAQ.com.