Stock Trading Simulation

No savvy trader would trade a system with a real account and risk real money without first observing its behavior  on paper. A trading simulator is a software application or component that allows the user to simulate, using historical stock market data, a trading account that is traded with a user-specified set of trading rules. The user’s trading rules are written into a small program that automates a rigorous  “paper-trading” process on a substantial amount of historical data. In this way, the trading simulator allows the trader to gain insight into how the system might perform when traded in a real account. The  ‘raison d’etre’  of a trading simulator is that it makes it possible to efficiently back-test, or paper-trade, a system to determine whether the system works and, if so, how well.